NWF Group plc's (LON:NWF) most recent earnings announcement in July 2019 showed that the company endured a significant headwind with earnings deteriorating by -13%. Below is a brief commentary on my key takeaways on how market analysts predict NWF Group's earnings growth outlook over the next few years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Market analysts' consensus outlook for the upcoming year seems rather muted, with earnings rising by a single digit 7.3%. The growth outlook in the following year seems much more positive with rates arriving at double digit 18% compared to today’s earnings and decreases to UK£7.8m by 2022.
While it’s useful to understand the growth rate each year relative to today’s level, it may be more insightful to estimate the rate at which the earnings are moving on average every year. The benefit of this technique is that we can get a bigger picture of the direction of NWF Group's earnings trajectory over the long run, irrespective of near term fluctuations, fluctuate up and down. To compute this rate, I've inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 5.5%. This means, we can expect NWF Group will grow its earnings by 5.5% every year for the next couple of years.
For NWF Group, I've compiled three fundamental aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is NWF worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether NWF is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of NWF? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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