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After CVS Group plc’s (LON:CVSG) earnings announcement in June 2018, it seems that analyst expectations are fairly bearish, as a 15% rise in profits is expected in the upcoming year, against the higher past 5-year average growth rate of 21%. By 2020, we can expect CVS Group’s bottom line to reach UK£12m, a jump from the current trailing-twelve-month of UK£11m. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
What can we expect from CVS Group in the longer term?
Longer term expectations from the 4 analysts covering CVSG’s stock is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. 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.
From the current net income level of UK£11m and the final forecast of UK£15m by 2022, the annual rate of growth for CVSG’s earnings is 11%. EPS reaches £0.25 in the final year of forecast compared to the current £0.16 EPS today. With a current profit margin of 3.3%, this movement will result in a margin of 3.4% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For CVS Group, I’ve put together three key 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 CVS 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 CVS Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of CVS 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 firstname.lastname@example.org.