The most recent earnings release Monadelphous Group Limited’s (ASX:MND) announced in June 2018 revealed that the company experienced a strong tailwind, leading to a double-digit earnings growth of 24%. Today I want to provide a brief commentary on how market analysts predict Monadelphous Group’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts’ consensus outlook for next year seems pessimistic, with earnings falling by a double-digit -12%. However, the next few years show a contrast, with earnings growth becoming positive in 2020, with the bottom line increasing to AU$88m in 2021.
Even though it’s informative understanding the growth each year relative to today’s level, it may be more valuable to determine the rate at which the earnings are moving every year, on average. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of Monadelphous Group’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 8.4%. This means, we can anticipate Monadelphous Group will grow its earnings by 8.4% every year for the next few years.
For Monadelphous Group, I’ve compiled three essential factors 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 MND 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 MND is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MND? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.