The most recent earnings update ASX Limited's (ASX:ASX) released in August 2019 indicated that the company benefited from a strong tailwind, leading to a double-digit earnings growth of 11%. Below, I've presented key growth figures on how market analysts view ASX's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. 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.
Market analysts' prospects for the upcoming year seems rather muted, with earnings increasing by a single digit 1.8%. The following year doesn't look much more exciting, though earnings does reach AU$549m in 2022.
Even though it is useful to understand the rate of growth year by year relative to today’s value, it may be more valuable to analyze the rate at which the earnings are growing every year, on average. The pro of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of ASX's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 4.0%. This means that, we can anticipate ASX will grow its earnings by 4.0% every year for the next couple of years.
For ASX, I've put together three pertinent aspects you should further research:
- Valuation: What is ASX 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 ASX is currently mispriced by the market.
- Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for ASX's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ASX? 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.