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Based on frontdoor, inc.'s (NASDAQ:FTDR) earnings update in March 2019, analysts seem fairly confident, with earnings expected to grow by 5.7% in the upcoming year relative to the past 5-year average growth rate of 3.5%. With trailing-twelve-month net income at current levels of US$125m, we should see this rise to US$132m in 2020. Below is a brief commentary around frontdoor's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.
What can we expect from frontdoor in the longer term?
The 11 analysts covering FTDR view its longer term outlook with a positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. 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 17% based on the most recent earnings level of US$125m to the final forecast of US$196m by 2022. EPS reaches $2.25 in the final year of forecast compared to the current $1.48 EPS today. In 2022, FTDR's profit margin will have expanded from 9.9% to 12%.
Future outlook is only one aspect when you're building an investment case for a stock. For frontdoor, I've put together three essential aspects 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 frontdoor 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 frontdoor is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of frontdoor? 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 email@example.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.