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Will InterContinental Hotels Group PLC's (LON:IHG) Earnings Grow In The Next 12 Months?

Simply Wall St

Based on InterContinental Hotels Group PLC's (LON:IHG) earnings update in December 2018, analyst consensus outlook appear cautiously optimistic, with earnings expected to grow by 44% in the upcoming year against the past 5-year average growth rate of 2.7%. Presently, with latest-twelve-month earnings at US$351m, we should see this growing to US$505m by 2020. Below is a brief commentary around InterContinental Hotels Group's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.

View our latest analysis for InterContinental Hotels Group

What can we expect from InterContinental Hotels Group in the longer term?

The view from 18 analysts over the next three years is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for IHG, 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:IHG Past and Future Earnings, August 5th 2019

By 2022, IHG's earnings should reach US$664m, from current levels of US$351m, resulting in an annual growth rate of 15%. This leads to an EPS of $3.63 in the final year of projections relative to the current EPS of $1.94. In 2022, IHG's profit margin will have expanded from 11% to 29%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For InterContinental Hotels Group, there are three key aspects you should further research:

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