Quickstep Holdings Limited's (ASX:QHL) most recent earnings update in August 2019 confirmed that the business finally turned profitable after losses on average over the past few years. Investors may find it useful to understand how market analysts view Quickstep Holdings's earnings growth trajectory over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts' prospects for next year seems optimistic, with earnings expanding by a significant 82%. This strong growth in earnings is expected to continue, bringing the bottom line up to AU$8.8m by 2022.
Even though it’s helpful to understand the growth year by year relative to today’s level, it may be more insightful evaluating the rate at which the earnings are rising or falling on average every year. The benefit of this method is that it ignores near term flucuations and accounts for the overarching direction of Quickstep Holdings's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put 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 35%. This means that, we can expect Quickstep Holdings will grow its earnings by 35% every year for the next few years.
For Quickstep Holdings, there are three essential 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.
- Future Earnings: How does QHL's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of QHL? 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 firstname.lastname@example.org. 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.