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Aristocrat Leisure Limited (ASX:ALL): Immense Growth Potential?

Simply Wall St

Looking at Aristocrat Leisure Limited's (ASX:ALL) earnings update in September 2018, it seems that analyst forecasts are fairly optimistic, with earnings growth rate expected to be 34% in the upcoming year, relative to the past five-year average earnings growth of 34% per year. By 2020, we can expect Aristocrat Leisure’s bottom line to reach AU$726m, a jump from the current trailing-twelve-month of AU$543m. Below is a brief commentary on the longer term outlook the market has for Aristocrat Leisure. For those interested in more of an analysis of the company, you can research its fundamentals here.

Check out our latest analysis for Aristocrat Leisure

What can we expect from Aristocrat Leisure in the longer term?

The view from 12 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for ALL, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

ASX:ALL Past and Future Earnings, April 18th 2019

By 2022, ALL's earnings should reach AU$937m, from current levels of AU$543m, resulting in an annual growth rate of 17%. This leads to an EPS of A$1.46 in the final year of projections relative to the current EPS of A$0.85. In 2022, ALL's profit margin will have expanded from 15% to 19%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Aristocrat Leisure, there are three pertinent factors you should further examine:

  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 Aristocrat Leisure 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 Aristocrat Leisure is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Aristocrat Leisure? 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 editorial-team@simplywallst.com. 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.