What Should You Know About The Future Of Burford Capital Limited’s (LON:BUR)?
After Burford Capital Limited’s (LON:BUR) earnings announcement in June 2018, analysts seem cautiously bearish, with profits predicted to rise by 0.2% next year against the higher past 5-year average growth rate of 54%. By 2019, we can expect Burford Capital’s bottom line to reach US$277m, a jump from the current trailing-twelve-month US$277m. Below is a brief commentary around Burford Capital’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
View our latest analysis for Burford Capital
How is Burford Capital going to perform in the near future?
The 8 analysts covering BUR view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of BUR’s earnings growth over these next few years.
From the current net income level of US$249m and the final forecast of US$434m by 2021, the annual rate of growth for BUR’s earnings is 22%. EPS reaches $2.29 in the final year of forecast compared to the current $1.2 EPS today. Growth in earnings appears to be a result of revenue expansion of 22% exceeeding cost growth over time. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 73% to 66% by the end of 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Burford Capital, I’ve compiled three important 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 Burford Capital 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 Burford Capital is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Burford Capital? 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.
