As Evolution Gaming Group AB (publ) (STO:EVO) released its earnings announcement on 30 September 2018, analysts seem fairly confident, as a 24% increase in profits is expected in the upcoming year, though this is relatively lower than the historical 5-year average earnings growth of 45%. With trailing-twelve-month net income at current levels of €76m, we should see this rise to €94m in 2019. Below is a brief commentary around Evolution Gaming Group’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.
How will Evolution Gaming Group perform in the near future?
The longer term view from the 6 analysts covering EVO is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of EVO’s earnings growth over these next few years.
From the current net income level of €62m and the final forecast of €89m by 2021, the annual rate of growth for EVO’s earnings is 14%. This leads to an EPS of €3.02 in the final year of projections relative to the current EPS of €1.73. The main reason for growth is a result of top-line expansion of 19%, dropping down to the bottome-line. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 35% to 28% by the end of 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Evolution Gaming Group, there are three essential aspects you should look at:
- 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 Evolution Gaming Group 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 Evolution Gaming Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Evolution Gaming Group? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.