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DWS Limited (ASX:DWS): Is It A Smart Long Term Opportunity?

Simply Wall St

On 30 June 2019, DWS Limited (ASX:DWS) released its earnings update. Generally, analysts seem cautiously optimistic, with profits predicted to increase by 33% next year compared with the past 5-year average growth rate of 3.4%. By 2020, we can expect DWS’s bottom line to reach AU$14m, a jump from the current trailing-twelve-month of AU$10m. Below is a brief commentary on the longer term outlook the market has for DWS. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

See our latest analysis for DWS

Exciting times ahead?

The view from 1 analysts over the next three years 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 get an idea of the overall earnings growth trend for DWS, 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:DWS Past and Future Earnings, August 15th 2019

By 2022, DWS's earnings should reach AU$15m, from current levels of AU$10m, resulting in an annual growth rate of 12%. EPS reaches A$0.12 in the final year of forecast compared to the current A$0.078 EPS today. With a current profit margin of 6.3%, this movement will result in a margin of 8.5% by 2022.

Next Steps:

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