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What Should You Know About GB Group plc's (LON:GBG) Growth?

Simply Wall St

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As GB Group plc (LON:GBG) announced its earnings release on 31 March 2019, it seems that analyst forecasts are substantially optimistic, with profits predicted to ramp up by an impressive 60% next year, relative to the historical 5-year average growth rate of 22%. Presently, with latest-twelve-month earnings at UK£12m, we should see this growing to UK£19m by 2020. Below is a brief commentary around GB Group'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.

See our latest analysis for GB Group

Can we expect GB Group to keep growing?

Longer term expectations from the 8 analysts covering GBG’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of GBG's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

AIM:GBG Past and Future Earnings, June 22nd 2019

By 2022, GBG's earnings should reach UK£29m, from current levels of UK£12m, resulting in an annual growth rate of 26%. EPS reaches £0.14 in the final year of forecast compared to the current £0.077 EPS today. Margins are currently sitting at 8.5%, which is expected to expand to 12% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For GB Group, there are three relevant factors you should further examine:

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