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Imperial Brands PLC (LON:IMB): What Does The Future Look Like?

Simply Wall St

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Based on Imperial Brands PLC's (LON:IMB) earnings update in March 2019, the consensus outlook from analysts appear fairly confident, as a 16% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of 0.5%. With trailing-twelve-month net income at current levels of UK£1.4b, we should see this rise to UK£1.6b in 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.

View our latest analysis for Imperial Brands

Can we expect Imperial Brands to keep growing?

The view from 16 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 get an idea of the overall earnings growth trend for IMB, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

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

This results in an annual growth rate of 6.3% based on the most recent earnings level of UK£1.4b to the final forecast of UK£1.8b by 2022. This leads to an EPS of £2.2 in the final year of projections relative to the current EPS of £1.44. Margins are currently sitting at 8.9%, which is expected to expand to 19% by 2022.

Next Steps:

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