Gateway Lifestyle Group (ASX:GTY) is expected to deliver an underwhelming negative -12.95% in earnings growth per share over the next three years. Presently, with an EPS of A$0.199, we can expect an upcoming EPS of A$0.174. To determine whether this negative growth rate expectation is justified, we should take a look at how the company has been performing in the past. Check out our latest analysis for Gateway Lifestyle Group
Adverse times ahead
The next couple of years are a potential rough ride for Gateway Lifestyle Group. This is based on 6 analysts who anticipate earnings dropping to A$0.174 from previous levels of around A$0.199. This would be a drop of -12.95%, so it will be an interesting ride for any existing shareholders over the next couple of years. In the same period revenue is expected to reduce slightly from A$144M to A$139M and profits (net income) are predicted to decline from A$60M to A$52M in the next couple of years. However, at this level of revenue and profit, margins are predicted to be extremely healthy.
Basis for the contraction
The past can be an insightful indicator for future performance for a stock. We can determine whether this level of expected growth is too pessimistic or whether the company has consistently shown a negative trend. GTY is expected to face a massive swing from a previous double-digit growth of 474.60%, over the last five years, to a forecast double-digit decline by analysts. This is highly bearish and may be a sign of an investment period for GTY, incurring higher expense growth than revenue.
For GTY, there are three fundamental 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 GTY 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 GTY is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of GTY? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.