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What Should You Know About GUD Holdings Limited's (ASX:GUD) Growth?

Simply Wall St

On 30 June 2019, GUD Holdings Limited (ASX:GUD) announced its earnings update. Overall, analyst forecasts seem fairly subdued, with profits predicted to rise by 2.6% next year compared with the higher past 5-year average growth rate of 19%. Currently with trailing-twelve-month earnings of AU$60m, we can expect this to reach AU$61m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for GUD Holdings in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.

See our latest analysis for GUD Holdings

How will GUD Holdings perform in the near future?

The 7 analysts covering GUD view its longer term outlook with a 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:GUD Past and Future Earnings, July 27th 2019

This results in an annual growth rate of 4.2% based on the most recent earnings level of AU$60m to the final forecast of AU$67m by 2022. EPS reaches A$0.76 in the final year of forecast compared to the current A$0.69 EPS today. By the end of 2022, analysts are expecting earnings to outpace revenue, and margins to expand from the current 14% to 14%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For GUD Holdings, I've compiled three fundamental aspects you should look at:

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