Fiducian Group Limited's (ASX:FID) latest earnings update in August 2019 signalled that the company experienced a robust tailwind, leading to a double-digit earnings growth of 13%. Investors may find it useful to understand how market analysts predict Fiducian Group's earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts' consensus outlook for next year seems buoyant, with earnings climbing by a robust 15%. This growth seems to continue into the following year with rates arriving at double digit 36% compared to today’s earnings, and finally hitting AU$16m by 2022.
Even though it is useful to be aware of the rate of growth each year relative to today’s value, it may be more valuable to determine the rate at which the earnings are rising or falling every year, on average. The pro of this approach is that it ignores near term flucuations and accounts for the overarching direction of Fiducian Group's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 14%. This means, we can presume Fiducian Group will grow its earnings by 14% every year for the next couple of years.
For Fiducian Group, I've put together three pertinent factors you should further examine:
- Valuation: What is FID 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 FID is currently mispriced by the market.
- Future Earnings: How does FID's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of FID? 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 firstname.lastname@example.org. 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.