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In March 2019, Topps Tiles Plc (LON:TPT) released its earnings update. Generally, analyst consensus outlook appear vastly optimistic, as a 54% rise in profits is expected in the upcoming year, relative to the previous 5-year average growth rate of -4.7%. With trailing-twelve-month net income at current levels of UK£9.7m, we should see this rise to UK£15m in 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Topps Tiles in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How is Topps Tiles going to perform in the near future?
The longer term expectations from the 3 analysts of TPT is tilted towards the 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 TPT'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.
By 2022, TPT's earnings should reach UK£16m, from current levels of UK£9.7m, resulting in an annual growth rate of 11%. This leads to an EPS of £0.071 in the final year of projections relative to the current EPS of £0.050. Margins are currently sitting at 4.5%, which is expected to expand to 6.9% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Topps Tiles, there are three essential aspects 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 Topps Tiles 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 Topps Tiles is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Topps Tiles? 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.