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HomeServe plc (LON:HSV): What's The Analyst Consensus Outlook?

Simply Wall St

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HomeServe plc's (LON:HSV) latest earnings update in March 2019 revealed that the company gained from a robust tailwind, leading to a double-digit earnings growth of 13%. Below, I've laid out key growth figures on how market analysts view HomeServe's earnings growth outlook over the next couple of 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.

View our latest analysis for HomeServe

Market analysts' consensus outlook for the coming year seems rather muted, with earnings growing by a single digit 8.3%. The growth outlook in the following year seems much more buoyant with rates generating double digit 21% compared to today’s earnings, and finally hitting UK£147m by 2022.

LSE:HSV Past and Future Earnings, June 10th 2019

Even though it’s useful to understand the rate of growth each year relative to today’s value, it may be more beneficial estimating the rate at which the earnings are growing on average every year. The pro of this approach is that we can get a better picture of the direction of HomeServe's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put 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 8.8%. This means, we can expect HomeServe will grow its earnings by 8.8% every year for the next couple of years.

Next Steps:

For HomeServe, I've put together three essential aspects you should look at:

  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 HSV 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 HSV is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of HSV? 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.