What Should You Know About ASX Limited’s (ASX:ASX) Future?
In June 2018, ASX Limited (ASX:ASX) released its earnings update. Generally, analysts seem fairly confident, as a 8.36% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of 4.64%. By 2019, we can expect ASX’s bottom line to reach AU$482.29m, a jump from the current trailing-twelve-month AU$445.10m. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for ASX in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
View our latest analysis for ASX
Can we expect ASX to keep growing?
The longer term view from the 12 analysts covering ASX 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.
This results in an annual growth rate of 5.75% based on the most recent earnings level of AU$445.10m to the final forecast of AU$532.90m by 2021. EPS reaches A$2.77 in the final year of forecast compared to the current A$2.3 EPS today. Growth in earnings appears to be a result of reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. Margins is currently sitting at 43.94%, which is expected to expand to 55.85% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For ASX, there are three relevant 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 ASX 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 ASX is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of ASX? 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
