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Data#3 Limited (ASX:DTL): Is It A Smart Long Term Opportunity?

Simply Wall St

On 30 June 2019, Data#3 Limited (ASX:DTL) released its earnings update. Generally, analyst consensus outlook appear cautiously subdued, with profits predicted to rise by 11% next year against the higher past 5-year average growth rate of 14%. By 2020, we can expect Data#3’s bottom line to reach AU$20m, a jump from the current trailing-twelve-month of AU$18m. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Data#3 in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

View our latest analysis for Data#3

Exciting times ahead?

Over the next three years, it seems the consensus view of the 1 analysts covering DTL is skewed towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for DTL, 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:DTL Past and Future Earnings, August 22nd 2019

From the current net income level of AU$18m and the final forecast of AU$25m by 2022, the annual rate of growth for DTL’s earnings is 11%. This leads to an EPS of A$0.16 in the final year of projections relative to the current EPS of A$0.12. Margins are currently sitting at 1.3%, which is expected to expand to 1.4% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Data#3, I've put together three essential factors you should further research:

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