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As Pennon Group Plc (LON:PNN) announced its earnings release on 31 March 2019, analyst forecasts seem fairly subdued, with earnings expected to grow by 10% in the upcoming year compared with the higher past 5-year average growth rate of 14%. Presently, with latest-twelve-month earnings at UK£214m, we should see this growing to UK£236m by 2020. Below is a brief commentary around Pennon Group's earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
What can we expect from Pennon Group in the longer term?
The 8 analysts covering PNN view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of PNN's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of UK£214m and the final forecast of UK£239m by 2022, the annual rate of growth for PNN’s earnings is 2.9%. EPS reaches £0.56 in the final year of forecast compared to the current £0.51 EPS today. Margins are currently sitting at 14%, which is expected to expand to 16% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Pennon Group, I've put together three relevant aspects 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 Pennon 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 Pennon Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Pennon 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.