What Should Investors Know About PPHE Hotel Group Limited's (LON:PPH) Future?
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In December 2018, PPHE Hotel Group Limited (LON:PPH) released its earnings update. Generally, analyst forecasts appear to be pessimistic, as a 12% fall in profits is expected in the upcoming year against the past 5-year average growth rate of 4.9%. Presently, with latest-twelve-month earnings at UK£38m, we should see this fall to UK£33m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
See our latest analysis for PPHE Hotel Group
How is PPHE Hotel Group going to perform in the near future?
Longer term expectations from the 3 analysts covering PPH’s stock 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 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.
From the current net income level of UK£38m and the final forecast of UK£38m by 2022, the annual rate of growth for PPH’s earnings is 2.0%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of £0.87 in the final year of forecast compared to the current £0.90 EPS today. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 11% to 10% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For PPHE Hotel Group, I've put together three important aspects 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 PPHE Hotel 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 PPHE Hotel Group is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of PPHE Hotel 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.
