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Based on Nichols plc's (LON:NICL) earnings update in December 2018, analyst forecasts appear to be conservative, with earnings growth rate expected to be 13% next year, which is within range of the past five-year average earnings growth of 14%. With trailing-twelve-month net income at current levels of UK£26m, we should see this rise to UK£29m in 2020. Below is a brief commentary on the longer term outlook the market has for Nichols. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How will Nichols perform in the near future?
The longer term view from the 6 analysts covering NICL is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around 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.
By 2022, NICL's earnings should reach UK£32m, from current levels of UK£26m, resulting in an annual growth rate of 4.3%. EPS reaches £0.79 in the final year of forecast compared to the current £0.69 EPS today. In 2022, NICL's profit margin will have expanded from 18% to 20%.
Future outlook is only one aspect when you're building an investment case for a stock. For Nichols, I've compiled three essential factors you should further research:
- 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.
- Valuation: What is Nichols 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 Nichols is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Nichols? 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 email@example.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.