DuluxGroup Limited (ASX:DLX): What Can We Expect From This High Growth Stock?
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DuluxGroup Limited's (ASX:DLX) most recent earnings announcement in September 2018 revealed that the company benefited from a small tailwind, leading to a single-digit earnings growth of 5.4%. Below is my commentary, albeit very simple and high-level, on how market analysts view DuluxGroup's earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Check out our latest analysis for DuluxGroup
Analysts' outlook for this coming year seems rather muted, with earnings increasing by a single digit 0.1%. The following year doesn't look much more exciting, though earnings does reach AU$162m in 2022.
Even though it is informative understanding the rate of growth year by year relative to today’s value, it may be more valuable analyzing the rate at which the business is growing on average every year. The advantage of this method is that it ignores near term flucuations and accounts for the overarching direction of DuluxGroup'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 analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 2.1%. This means, we can anticipate DuluxGroup will grow its earnings by 2.1% every year for the next few years.
Next Steps:
For DuluxGroup, there are three important aspects you should further research:
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.
Valuation: What is DLX 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 DLX is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of DLX? 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.
