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What Should We Expect From Ethan Allen Interiors Inc.'s (NYSE:ETH) Earnings In The Year Ahead?

Simply Wall St

Looking at Ethan Allen Interiors Inc.'s (NYSE:ETH) earnings update in March 2019, analyst consensus outlook appear cautiously optimistic, as a 11% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of -3.0%. By 2020, we can expect Ethan Allen Interiors’s bottom line to reach US$40m, a jump from the current trailing-twelve-month of US$36m. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Ethan Allen Interiors in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.

View our latest analysis for Ethan Allen Interiors

Can we expect Ethan Allen Interiors to keep growing?

Longer term expectations from the 5 analysts covering ETH’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 get an idea of the overall earnings growth trend for ETH, 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.

NYSE:ETH Past and Future Earnings, July 31st 2019
NYSE:ETH Past and Future Earnings, July 31st 2019

From the current net income level of US$36m and the final forecast of US$51m by 2022, the annual rate of growth for ETH’s earnings is 11%. EPS reaches $2.11 in the final year of forecast compared to the current $1.33 EPS today. With a current profit margin of 4.7%, this movement will result in a margin of 6.3% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Ethan Allen Interiors, there are three key 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 Ethan Allen Interiors 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 Ethan Allen Interiors is currently mispriced by the market.

  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Ethan Allen Interiors? 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.