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Restore plc's (LON:RST) latest earnings update in December 2018 suggested that the company gained from a significant tailwind, more than doubling its earnings from the prior year. Below, I've laid out key numbers on how market analysts predict Restore's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts' expectations for the coming year seems buoyant, with earnings climbing by a robust 22%. This growth seems to continue into the following year with rates reaching double digit 99% compared to today’s earnings, and finally hitting UK£39m by 2022.
Even though it’s useful to understand the rate of growth year by year relative to today’s value, it may be more beneficial to determine the rate at which the business is rising or falling every year, on average. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of Restore'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 20%. This means, we can expect Restore will grow its earnings by 20% every year for the next few years.
For Restore, there are three essential aspects you should look at:
- 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 RST 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 RST is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of RST? 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.