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In September 2018, HomeServe plc (LON:HSV) released its earnings update. Generally, it seems that analyst expectations are fairly bearish, with earnings expected to grow by 17% in the upcoming year relative to the higher past 5-year average growth rate of 28%. Presently, with latest-twelve-month earnings at UK£96m, we should see this growing to UK£112m by 2020. Below is a brief commentary on the longer term outlook the market has for HomeServe. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How is HomeServe going to perform in the near future?
The longer term expectations from the 10 analysts of HSV is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of HSV'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.
From the current net income level of UK£96m and the final forecast of UK£135m by 2022, the annual rate of growth for HSV’s earnings is 11%. EPS reaches £0.39 in the final year of forecast compared to the current £0.30 EPS today. In 2022, HSV's profit margin will have expanded from 11% to 12%.
Future outlook is only one aspect when you're building an investment case for a stock. For HomeServe, I've compiled three pertinent aspects you should further examine:
- 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 HomeServe 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 HomeServe is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of HomeServe? 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.