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Galliford Try plc (LON:GFRD): Poised For Long-Term Success?

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The latest earnings announcement Galliford Try plc (LON:GFRD) released in June 2018 confirmed that the company benefited from a major tailwind, more than doubling its earnings from the prior year. Below is a brief commentary on my key takeaways on how market analysts view Galliford Try’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

See our latest analysis for Galliford Try

Market analysts’ prospects for the upcoming year seems positive, with earnings increasing by a robust 13%. This growth seems to continue into the following year with rates reaching double digit 36% compared to today’s earnings, and finally hitting UK£173m by 2022.

LSE:GFRD Future Profit February 6th 19
LSE:GFRD Future Profit February 6th 19

Although it is helpful to be aware of the growth rate each year relative to today’s value, it may be more beneficial to evaluate the rate at which the earnings are rising or falling on average every year. The pro of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Galliford Try’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 13%. This means, we can anticipate Galliford Try will grow its earnings by 13% every year for the next couple of years.

Next Steps:

For Galliford Try, I’ve compiled three essential aspects 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 GFRD 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 GFRD is currently mispriced by the market.

  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of GFRD? 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 editorial-team@simplywallst.com.