Looking at Card Factory plc’s (LON:CARD) earnings update in January 2018, analyst consensus outlook appear cautiously subdued, as a 2.4% rise in profits is expected in the upcoming year, against the higher past 5-year average growth rate of 28.0%. Currently with trailing-twelve-month earnings of UK£58.3m, we can expect this to reach UK£59.7m by 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Exciting times ahead?
The longer term expectations from the 6 analysts of CARD is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of CARD’s earnings growth over these next few years.
This results in an annual growth rate of 3.3% based on the most recent earnings level of UK£58.3m to the final forecast of UK£64.3m by 2021. This leads to an EPS of £0.19 in the final year of projections relative to the current EPS of £0.17. Growth in the bottom line seems to suggest revenue expansion of 3.9% exceeeding cost growth over time. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 13.8% to 13.5% by the end of 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Card Factory, I’ve compiled three fundamental factors you should further examine:
- 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 Card Factory 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 Card Factory is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Card Factory? 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.