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How Do Analysts See PSC Insurance Group Limited (ASX:PSI) Performing In The Next Couple Of Years?

Simply Wall St

PSC Insurance Group Limited's (ASX:PSI) latest earnings update in August 2019 revealed that the business experienced a major headwind with earnings declining by -10%. Below is my commentary, albeit very simple and high-level, on how market analysts predict PSC Insurance Group's earnings growth outlook over the next couple of 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.

See our latest analysis for PSC Insurance Group

Market analysts' consensus outlook for this coming year seems buoyant, with earnings climbing by a robust 42%. This growth seems to continue into the following year with rates arriving at double digit 57% compared to today’s earnings, and finally hitting AU$42m by 2022.

ASX:PSI Past and Future Earnings, August 26th 2019

Although it is useful to be aware of the rate of growth each year relative to today’s level, it may be more beneficial to determine the rate at which the earnings are rising or falling on average every year. The pro of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of PSC Insurance Group's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 16%. This means that, we can assume PSC Insurance Group will grow its earnings by 16% every year for the next couple of years.

Next Steps:

For PSC Insurance Group, I've put together three important factors you should look at:

  1. 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.
  2. Valuation: What is PSI 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 PSI is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of PSI? 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 editorial-team@simplywallst.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.