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discoverIE Group plc (LON:DSCV): Will The Growth Last?

Simply Wall St

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As discoverIE Group plc (LON:DSCV) released its earnings announcement on 31 March 2019, analysts seem cautiously optimistic, with earnings expected to grow by 25% in the upcoming year, though this is noticeably lower than the previous 5-year average earnings growth of 32%. By 2020, we can expect discoverIE Group’s bottom line to reach UK£18m, a jump from the current trailing-twelve-month of UK£15m. Below is a brief commentary around discoverIE Group's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.

View our latest analysis for discoverIE Group

Can we expect discoverIE Group to keep growing?

The longer term view from the 6 analysts covering DSCV is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of DSCV's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

LSE:DSCV Past and Future Earnings, July 4th 2019

By 2022, DSCV's earnings should reach UK£19m, from current levels of UK£15m, resulting in an annual growth rate of 10.0%. This leads to an EPS of £0.23 in the final year of projections relative to the current EPS of £0.20. With a current profit margin of 3.3%, this movement will result in a margin of 3.9% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For discoverIE Group, I've put together three important 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 discoverIE Group 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 discoverIE Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of discoverIE Group? 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.