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What Should You Know About The Future Of Webjet Limited's (ASX:WEB)?

Simply Wall St

As Webjet Limited (ASX:WEB) announced its earnings release on 30 June 2019, it seems that analyst forecasts are fairly optimistic, with earnings expected to grow by 45% in the upcoming year against the past 5-year average growth rate of 24%. Presently, with latest-twelve-month earnings at AU$60m, we should see this growing to AU$87m by 2020. Below is a brief commentary on the longer term outlook the market has for Webjet. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for Webjet

What can we expect from Webjet in the longer term?

The longer term view from the 7 analysts covering WEB is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. 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.

ASX:WEB Past and Future Earnings, August 24th 2019

By 2022, WEB's earnings should reach AU$129m, from current levels of AU$60m, resulting in an annual growth rate of 23%. This leads to an EPS of A$0.99 in the final year of projections relative to the current EPS of A$0.47. With a current profit margin of 16%, this movement will result in a margin of 24% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Webjet, I've compiled three essential factors you should further research:

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