As Restore plc (LON:RST) released its earnings announcement on 31 December 2018, analysts seem fairly confident, with earnings expected to grow by 22% in the upcoming year, though this is comparatively lower than the previous 5-year average earnings growth of 27%. With trailing-twelve-month net income at current levels of UK£19m, we should see this rise to UK£23m in 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Restore in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect Restore to keep growing?
The longer term view from the 3 analysts covering RST 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 RST's earnings growth over these next few years.
By 2022, RST's earnings should reach UK£39m, from current levels of UK£19m, resulting in an annual growth rate of 20%. This leads to an EPS of £0.30 in the final year of projections relative to the current EPS of £0.15. In 2022, RST's profit margin will have expanded from 9.5% to 17%.
Future outlook is only one aspect when you're building an investment case for a stock. For Restore, there are three important factors 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 Restore 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 Restore is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Restore? 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.