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What Should You Know About Associated British Foods plc's (LON:ABF) Future?

Simply Wall St

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Based on Associated British Foods plc's (LON:ABF) earnings update in March 2019, analyst consensus outlook appear cautiously optimistic, as a 20% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of 12%. Presently, with latest-twelve-month earnings at UK£1.0b, we should see this growing to UK£1.2b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

View our latest analysis for Associated British Foods

Can we expect Associated British Foods to keep growing?

Over the next three years, it seems the consensus view of the 18 analysts covering ABF is skewed towards the 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 ABF, 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:ABF Past and Future Earnings, July 3rd 2019

By 2022, ABF's earnings should reach UK£1.5b, from current levels of UK£1.0b, resulting in an annual growth rate of 11%. EPS reaches £1.68 in the final year of forecast compared to the current £1.27 EPS today. Margins are currently sitting at 6.5%, which is expected to expand to 8.3% by 2022.

Next Steps:

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