Mainfreight Limited (NZSE:MFT): What Are The Future Prospects?
Mainfreight Limited’s (NZSE:MFT) latest earnings update in March 2018 indicated that the business benefited from a slight tailwind, eventuating to a single-digit earnings growth of 6.3%. Below, I’ve laid out key growth figures on how market analysts predict Mainfreight’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
See our latest analysis for Mainfreight
Market analysts’ consensus outlook for next year seems buoyant, with earnings increasing by a robust 21%. This growth seems to continue into the following year with rates reaching double digit 35% compared to today’s earnings, and finally hitting NZ$158m by 2021.
Although it is helpful to be aware of the growth each year relative to today’s value, it may be more insightful to evaluate the rate at which the business is growing every year, on average. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of Mainfreight’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 12%. This means, we can presume Mainfreight will grow its earnings by 12% every year for the next couple of years.
Next Steps:
For Mainfreight, there are three pertinent factors you should look at:
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 MFT 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 MFT is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MFT? 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 editorial-team@simplywallst.com.
