Hays plc’s (LON:HAS) most recent earnings announcement in June 2018 showed that the company experienced a strong tailwind, leading to a double-digit earnings growth of 19%. Below, I’ve presented key growth figures on how market analysts perceive Hays’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Market analysts’ consensus outlook for next year seems rather muted, with earnings expanding by a single digit 9.0%. The growth outlook in the following year seems much more optimistic with rates reaching double digit 20% compared to today’s earnings, and finally hitting UK£218m by 2021.
Although it is useful to be aware of the growth rate each year relative to today’s value, it may be more valuable gauging the rate at which the business is growing every year, on average. The pro of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Hays’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 analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 9.3%. This means, we can assume Hays will grow its earnings by 9.3% every year for the next few years.
For Hays, there are three important factors 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 HAS 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 HAS is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of HAS? 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 email@example.com.