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What Should You Know About Speedy Hire Plc's (LON:SDY) Earnings Trend?

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Speedy Hire Plc's (LON:SDY) most recent earnings update in June 2019 signalled that the company experienced a large tailwind, leading to a high double-digit earnings growth of 57%. Below, I've laid out key numbers on how market analysts predict Speedy Hire's earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

Check out our latest analysis for Speedy Hire

Market analysts' consensus outlook for the coming year seems buoyant, with earnings rising by a robust 31%. This growth seems to continue into the following year with rates arriving at double digit 45% compared to today’s earnings, and finally hitting UK£35m by 2022.

LSE:SDY Past and Future Earnings, July 2nd 2019
LSE:SDY Past and Future Earnings, July 2nd 2019

Although it’s useful to understand the growth rate each year relative to today’s level, it may be more insightful to determine the rate at which the business is moving on average every year. The pro of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Speedy Hire's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've appended 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 14%. This means, we can expect Speedy Hire will grow its earnings by 14% every year for the next few years.

Next Steps:

For Speedy Hire, there are three fundamental 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 SDY 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 SDY is currently mispriced by the market.

  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SDY? 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.

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