What Do Analysts Think About Groupon Inc’s (NASDAQ:GRPN) Future?
Looking at Groupon Inc’s (NASDAQ:GRPN) earnings update in December 2017, analysts seem highly optimistic, with profits predicted to ramp up by an impressive 55.63% next year, compared with the past 5-year average growth rate of 30.43%. By 2019, we can expect Groupon’s bottom line to reach $24.9M, a jump from the current $16.0M. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Groupon in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here. View our latest analysis for Groupon
How is Groupon going to perform in the near future?
Longer term expectations from the 17 analysts covering GRPN’s stock is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. 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.
By 2021, GRPN’s earnings should reach $87.1M, from current levels of $16.0M, resulting in an annual growth rate of 33.15%. This leads to an EPS of $0.17 in the final year of projections relative to the current EPS of $0.03. The main reason for growth is a result of reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. In 2021, GRPN’s profit margin will have expanded from 0.56% to 3.21%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Groupon, I’ve put together three pertinent factors you should further research:
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 Groupon 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 Groupon is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Groupon? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
