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What Should You Know About The Citadel Group Limited's (ASX:CGL) Future?

Simply Wall St

As The Citadel Group Limited (ASX:CGL) released its earnings announcement on 30 June 2019, analyst consensus outlook appear vastly optimistic, with earnings expected to grow by a high double-digit of 62% in the upcoming year, compared with the past 5-year average growth rate of 22%. Currently with trailing-twelve-month earnings of AU$7.9m, we can expect this to reach AU$13m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Citadel Group in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for Citadel Group

How is Citadel Group going to perform in the near future?

Over the next three years, it seems the consensus view of the 2 analysts covering CGL is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for CGL, 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.

ASX:CGL Past and Future Earnings, August 20th 2019

From the current net income level of AU$7.9m and the final forecast of AU$16m by 2022, the annual rate of growth for CGL’s earnings is 18%. EPS reaches A$0.44 in the final year of forecast compared to the current A$0.16 EPS today. Margins are currently sitting at 7.9%, which is expected to expand to 12% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Citadel Group, I've put together three fundamental aspects you should further examine:

  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 Citadel 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 Citadel Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Citadel 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.