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Dunelm Group plc (LON:DNLM): What Does The Future Look Like?

Rowena Monahan

Looking at Dunelm Group plc’s (LON:DNLM) earnings update in June 2018, analysts seem fairly confident, as a 20% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of -3.0%. Presently, with latest-twelve-month earnings at UK£73m, we should see this growing to UK£88m by 2020. Below is a brief commentary around Dunelm Group’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

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Can we expect Dunelm Group to keep growing?

The 9 analysts covering DNLM view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

LSE:DNLM Future Profit January 16th 19

By 2022, DNLM’s earnings should reach UK£105m, from current levels of UK£73m, resulting in an annual growth rate of 12%. This leads to an EPS of £0.51 in the final year of projections relative to the current EPS of £0.36. In 2022, DNLM’s profit margin will have expanded from 7.0% to 9.1%.

Next Steps:

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

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.