On 29 June 2019, Inghams Group Limited (ASX:ING) announced its latest earnings update. Overall, analyst consensus outlook appear bearish, with earnings expected to decline by 14% in the upcoming year relative to the past 5-year average growth rate of 24%. Currently with a trailing-twelve-month profit of AU$126m, the consensus growth rate suggests that earnings will drop to AU$108m by 2020. Below is a brief commentary on the longer term outlook the market has for Inghams Group. For those interested in more of an analysis of the company, you can research its fundamentals here.
Can we expect Inghams Group to keep growing?
The view from 7 analysts over the next three years is one of negative sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of ING'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.
By 2022, ING's earnings should reach AU$117m, from current levels of AU$126m, resulting in an annual growth rate of -3.0%. EPS reaches A$0.32 in the final year of forecast compared to the current A$0.34 EPS today. Contraction in the bottom line seems to suggest cost outpacing top line growth of 1.6% over the next few years. Furthermore, the current 5.0% margin is expected to contract to 4.4% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Inghams Group, I've put together three relevant aspects you should further examine:
- 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 Inghams 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 Inghams Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Inghams 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 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.