U.S. Markets open in 2 hrs 18 mins

J D Wetherspoon plc (LON:JDW): Will The Growth Last?

Simply Wall St

Based on J D Wetherspoon plc's (LON:JDW) earnings update on 28 July 2019, the consensus outlook from analysts appear somewhat bearish, with earnings expected to grow by 2.0% in the upcoming year relative to the higher past 5-year average growth rate of 12%. By 2020, we can expect J D Wetherspoon’s bottom line to reach UK£74m, a jump from the current trailing-twelve-month of UK£73m. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for J D Wetherspoon in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

Check out our latest analysis for J D Wetherspoon

How is J D Wetherspoon going to perform in the near future?

The longer term view from the 12 analysts covering JDW 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 get an idea of the overall earnings growth trend for JDW, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

LSE:JDW Past and Future Earnings, September 15th 2019

This results in an annual growth rate of 4.5% based on the most recent earnings level of UK£73m to the final forecast of UK£80m by 2022. This leads to an EPS of £0.77 in the final year of projections relative to the current EPS of £0.71. However, the expansion of the current 4.0% margin is not expected to be sustained, as it begins to contract to 4.0% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For J D Wetherspoon, I've put together three key aspects 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 J D Wetherspoon 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 J D Wetherspoon is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of J D Wetherspoon? 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.