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What Should Investors Know About Acrow Formwork and Construction Services Limited's (ASX:ACF) Growth?

Simply Wall St

On 30 June 2019, Acrow Formwork and Construction Services Limited (ASX:ACF) released its earnings update. Generally, the consensus outlook from analysts appear highly confident, with profits predicted to ramp up by an impressive 70% next year, though this is relatively lower than the previous 5-year average earnings growth of 79%. By 2020, we can expect Acrow Formwork and Construction Services’s bottom line to reach AU$8.4m, a jump from the current trailing-twelve-month of AU$4.9m. Below is a brief commentary around Acrow Formwork and Construction Services'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 Acrow Formwork and Construction Services

How is Acrow Formwork and Construction Services going to perform in the near future?

Longer term expectations from the 1 analysts covering ACF’s stock is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly 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.

ASX:ACF Past and Future Earnings, August 31st 2019

This results in an annual growth rate of 19% based on the most recent earnings level of AU$4.9m to the final forecast of AU$9.8m by 2022. This leads to an EPS of A$0.055 in the final year of projections relative to the current EPS of A$0.029. In 2022, ACF's profit margin will have expanded from 7.0% to 13%.

Next Steps:

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