What Do Analysts Think About Nichols plc’s (LON:NICL) Earnings Trajectory?
The latest earnings announcement Nichols plc’s (AIM:NICL) released in December 2017 showed that the company endured a slight headwind with earnings falling from UK£25.48M to UK£23.17M, a change of -9.04%. Below, I’ve presented key growth figures on how market analysts predict Nichols’s earnings growth outlook over the next few years and whether the future looks brighter. 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. See our latest analysis for Nichols
Market analysts’ prospects for the coming year seems rather subdued, with earnings climbing by a single digit 9.99%. The growth outlook in the following year seems much more positive with rates reaching double digit 15.24% compared to today’s earnings, and finally hitting UK£27.66M by 2021.
Even though it’s informative understanding the rate of growth each year relative to today’s level, it may be more insightful analyzing the rate at which the business is moving on average every year. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of Nichols’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 5.09%. This means, we can presume Nichols will grow its earnings by 5.09% every year for the next couple of years.
Next Steps:
For Nichols, there are 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 NICL 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 NICL is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of NICL? 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.
