GBST Holdings Limited (ASX:GBT): Poised For Long-Term Success?
In June 2018, GBST Holdings Limited (ASX:GBT) announced its latest earnings update, which showed that the business faced a immense headwind with earnings declining by -11%. Below, I’ve laid out key numbers on how market analysts predict GBST Holdings’s earnings growth outlook over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Check out our latest analysis for GBST Holdings
Analysts’ outlook for the coming year seems rather subdued, with earnings increasing by a single digit 7.4%. The growth outlook in the following year seems much more buoyant with rates arriving at double digit 52% compared to today’s earnings, and finally hitting AU$13m by 2021.
Although it’s informative understanding the rate of growth year by year relative to today’s figure, it may be more valuable analyzing the rate at which the business is growing on average every year. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of GBST Holdings’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 24%. This means, we can expect GBST Holdings will grow its earnings by 24% every year for the next few years.
Next Steps:
For GBST Holdings, I’ve compiled three pertinent aspects you should further research:
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 GBT 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 GBT is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of GBT? 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.
