What Should Investors Know About ITV plc’s (LON:ITV) Future?
The latest earnings update ITV plc’s (LSE:ITV) released in June 2017 showed that the business experienced a slight headwind with earnings declining from £495.0M to £449.0M, a change of -9.29%. Below is a brief commentary on my key takeaways on how market analysts predict ITV’s earnings growth outlook over the next couple of years and whether the future looks brighter. 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. Check out our latest analysis for ITV
Market analysts’ consensus outlook for next year seems buoyant, with earnings climbing by a robust 15.54%. This growth seems to continue into the following year with rates arriving at double digit 25.27% compared to today’s earnings and decreases to £483.9M by 2020.
While it’s useful to understand the growth each year relative to today’s level, it may be more beneficial estimating the rate at which the earnings are growing on average every year. The advantage of this approach is that we can get a better picture of the direction of ITV’s earnings trajectory over the long run, irrespective of near term fluctuations, fluctuate up and down. To compute this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 6.62%. This means that, we can anticipate ITV will grow its earnings by 6.62% every year for the next couple of years.
Next Steps:
For ITV, I’ve compiled three key factors 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 ITV 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 ITV is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of ITV? 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.
