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Since frontdoor, inc. (NASDAQ:FTDR) released its earnings in March 2019, it seems that analyst forecasts are fairly optimistic, as a 5.7% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of 3.5%. Currently with trailing-twelve-month earnings of US$125m, we can expect this to reach US$132m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for frontdoor in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
What can we expect from frontdoor in the longer term?
The longer term expectations from the 11 analysts of FTDR 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 reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of US$125m and the final forecast of US$196m by 2022, the annual rate of growth for FTDR’s earnings is 17%. EPS reaches $2.25 in the final year of forecast compared to the current $1.48 EPS today. Margins are currently sitting at 9.9%, which is expected to expand to 12% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For frontdoor, I've compiled three fundamental factors you should further research:
- 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 frontdoor 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 frontdoor is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of frontdoor? 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.