U.S. Markets open in 6 hrs 40 mins

How Do Analysts See Spark New Zealand Limited (NZSE:SPK) Performing In The Year Ahead?

Simply Wall St

After Spark New Zealand Limited's (NZSE:SPK) earnings announcement on 30 June 2019, analysts seem cautiously bearish, as a 2.7% rise in profits is expected in the upcoming year, against the higher past 5-year average growth rate of 3.7%. With trailing-twelve-month net income at current levels of NZ$409m, we should see this rise to NZ$420m in 2020. Below is a brief commentary on the longer term outlook the market has for Spark New Zealand. For those interested in more of an analysis of the company, you can research its fundamentals here.

Check out our latest analysis for Spark New Zealand

How will Spark New Zealand perform in the near future?

The longer term view from the 8 analysts covering SPK is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of SPK'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.

NZSE:SPK Past and Future Earnings, August 21st 2019

From the current net income level of NZ$409m and the final forecast of NZ$457m by 2022, the annual rate of growth for SPK’s earnings is 3.5%. EPS reaches NZ$0.25 in the final year of forecast compared to the current NZ$0.22 EPS today. In 2022, SPK's profit margin will have expanded from 12% to 13%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Spark New Zealand, there are three relevant factors you should further examine:

  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 Spark New Zealand 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 Spark New Zealand is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Spark New Zealand? 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.