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discoverIE Group plc's (LON:DSCV) most recent earnings update in June 2019 indicated that the company gained from a strong tailwind, leading to a double-digit earnings growth of 38%. Below, I've laid out key numbers on how market analysts perceive discoverIE Group's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. 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 this coming year seems positive, with earnings climbing by a robust 25%. This growth seems to continue into the following year with rates reaching double digit 32% compared to today’s earnings, and finally hitting UK£19m by 2022.
While it’s useful to understand the growth rate each year relative to today’s level, it may be more insightful to determine the rate at which the earnings are rising or falling every year, on average. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of discoverIE Group's earnings trajectory over time, be more volatile. 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 10.0%. This means that, we can assume discoverIE Group will grow its earnings by 10.0% every year for the next couple of years.
For discoverIE Group, I've compiled three pertinent factors you should further research:
- 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 DSCV 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 DSCV is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of DSCV? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.