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Hollywood Bowl Group plc (LON:BOWL): Poised For Long Term Success?

Simply Wall St

In March 2019, Hollywood Bowl Group plc (LON:BOWL) released its earnings update. Generally, it seems that analyst expectations are fairly bearish, with profits predicted to rise by 5.0% next year compared with the higher past 5-year average growth rate of 38%. Presently, with latest-twelve-month earnings at UK£19m, we should see this growing to UK£20m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for Hollywood Bowl Group

Exciting times ahead?

The view from 7 analysts over the next three years 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.

LSE:BOWL Past and Future Earnings, August 8th 2019

From the current net income level of UK£19m and the final forecast of UK£22m by 2022, the annual rate of growth for BOWL’s earnings is 6.1%. This leads to an EPS of £0.16 in the final year of projections relative to the current EPS of £0.13. Margins are currently sitting at 16%, which is expected to expand to 16% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Hollywood Bowl Group, I've compiled three relevant aspects 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 Hollywood Bowl 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 Hollywood Bowl Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Hollywood Bowl 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.