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As Meggitt PLC (LON:MGGT) announced its earnings release on 31 December 2018, the consensus outlook from analysts appear fairly confident, as a 12% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of 6.3%. Currently with trailing-twelve-month earnings of UK£179m, we can expect this to reach UK£201m by 2020. Below is a brief commentary on the longer term outlook the market has for Meggitt. For those interested in more of an analysis of the company, you can research its fundamentals here.
What can we expect from Meggitt in the longer term?
Over the next three years, it seems the consensus view of the 14 analysts covering MGGT is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of MGGT's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of UK£179m and the final forecast of UK£260m by 2022, the annual rate of growth for MGGT’s earnings is 11%. This leads to an EPS of £0.33 in the final year of projections relative to the current EPS of £0.23. In 2022, MGGT's profit margin will have expanded from 8.6% to 11%.
Future outlook is only one aspect when you're building an investment case for a stock. For Meggitt, there are three relevant aspects 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 Meggitt 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 Meggitt is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Meggitt? 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 email@example.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.