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What Should We Expect From Flight Centre Travel Group Limited's (ASX:FLT) Earnings In The Year Ahead?

Simply Wall St

On 30 June 2019, Flight Centre Travel Group Limited (ASX:FLT) released its earnings update. Generally, the consensus outlook from analysts appear fairly confident, as a 7.1% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of 3.3%. By 2020, we can expect Flight Centre Travel Group’s bottom line to reach AU$282m, a jump from the current trailing-twelve-month of AU$264m. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Flight Centre Travel Group in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for Flight Centre Travel Group

Exciting times ahead?

The longer term view from the 13 analysts covering FLT is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. 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.

ASX:FLT Past and Future Earnings, August 23rd 2019

This results in an annual growth rate of 7.8% based on the most recent earnings level of AU$264m to the final forecast of AU$332m by 2022. EPS reaches A$3.31 in the final year of forecast compared to the current A$2.62 EPS today. With a current profit margin of 8.5%, this movement will result in a margin of 9.4% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Flight Centre Travel Group, there are three key factors you should further examine:

  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 Flight Centre Travel 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 Flight Centre Travel Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Flight Centre Travel 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!

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.