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Bellamy's Australia Limited (ASX:BAL): Will The Growth Last?

Simply Wall St

Bellamy's Australia Limited's (ASX:BAL) latest earnings announcement in August 2019 indicated that the company experienced a major headwind with earnings deteriorating by -49%. Below, I've presented key growth figures on how market analysts predict Bellamy's Australia's earnings growth outlook over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

View our latest analysis for Bellamy's Australia

Analysts' outlook for this coming year seems positive, with earnings growing by a significant 51%. This strong growth in earnings is expected to continue, bringing the bottom line up to AU$51m by 2022.

ASX:BAL Past and Future Earnings, September 2nd 2019

While it is helpful to be aware of the growth each year relative to today’s figure, it may be more beneficial to analyze the rate at which the company is rising or falling every year, on average. The pro of this method is that we can get a bigger picture of the direction of Bellamy's Australia's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate 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 23%. This means, we can presume Bellamy's Australia will grow its earnings by 23% every year for the next couple of years.

Next Steps:

For Bellamy's Australia, 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 BAL 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 BAL is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BAL? 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.