The most recent earnings update C&C Group plc’s (ISE:GCC) released in February 2018 indicated that the business turned profitable again after incurring negative earnings in the previous financial year. Below is a brief commentary on my key takeaways on how market analysts predict C&C Group’s earnings growth outlook over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts’ consensus outlook for the coming year seems positive, with earnings increasing by a robust 35.7%. This growth seems to continue into the following year with rates arriving at double digit 46.3% compared to today’s earnings, and finally hitting €103.5m by 2021.
Although it’s useful to understand the growth rate year by year relative to today’s value, it may be more valuable evaluating the rate at which the business is growing every year, on average. The benefit of this method is that it ignores near term flucuations and accounts for the overarching direction of C&C Group’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 14.0%. This means, we can expect C&C Group will grow its earnings by 14.0% every year for the next few years.
For C&C Group, there are three pertinent factors you should look at:
- 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 GCC 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 GCC is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of GCC? 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 email@example.com.