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In December 2018, Monadelphous Group Limited (ASX:MND) announced its earnings update. Overall, it seems that analyst forecasts are fairly optimistic, with profits predicted to increase by 7.1% next year against the past 5-year average growth rate of -22%. Presently, with latest-twelve-month earnings at AU$71m, we should see this growing to AU$77m by 2020. Below is a brief commentary around Monadelphous Group's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Can we expect Monadelphous Group to keep growing?
Over the next three years, it seems the consensus view of the 12 analysts covering MND is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for MND, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of AU$71m and the final forecast of AU$101m by 2022, the annual rate of growth for MND’s earnings is 13%. This leads to an EPS of A$0.99 in the final year of projections relative to the current EPS of A$0.76. With a current profit margin of 4.1%, this movement will result in a margin of 4.7% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Monadelphous Group, there are three key factors 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 Monadelphous 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 Monadelphous Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Monadelphous 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!
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.