As WPP plc (LON:WPP) released its earnings announcement on 30 June 2019, analysts seem extremely confident, as a 57% rise in profits is expected in the upcoming year, relative to the historical 5-year average growth rate of 4.6%. With trailing-twelve-month net income at current levels of UK£1.1b, we should see this rise to UK£1.7b in 2020. Below is a brief commentary around WPP's earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How will WPP perform in the near future?
The view from 17 analysts over the next three years is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. 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.
From the current net income level of UK£1.1b and the final forecast of UK£2.1b by 2022, the annual rate of growth for WPP’s earnings is 10%. EPS reaches £1.08 in the final year of forecast compared to the current £0.85 EPS today. Margins are currently sitting at 6.8%, which is expected to expand to 17% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For WPP, I've put together three key aspects you should look at:
- 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 WPP 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 WPP is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of WPP? 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.