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Avast Plc (LON:AVST): What Are The Future Prospects?

Simply Wall St

Avast Plc's (LON:AVST) most recent earnings announcement in December 2018 revealed that the company turned profitable again after incurring negative earnings in the previous financial year. Below, I've laid out key numbers on how market analysts view Avast's earnings growth outlook over the next couple of 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.

Check out our latest analysis for Avast

Analysts' expectations for this coming year seems pessimistic, with earnings decreasing by a double-digit -21%. However, the next few years show a contrast, with earnings growth becoming positive in 2021, with the bottom line increasing to US$271m in 2022.

LSE:AVST Past and Future Earnings, April 20th 2019

Even though it is useful to understand the rate of growth year by year relative to today’s figure, it may be more beneficial to determine the rate at which the business is growing every year, on average. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of Avast's earnings trajectory over time, which may be more relevant for long term investors. To compute 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 6.8%. This means, we can expect Avast will grow its earnings by 6.8% every year for the next few years.

Next Steps:

For Avast, I've put together three essential aspects you should look at:

  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 AVST 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 AVST is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of AVST? 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.