Looking at Manchester United plc's (NYSE:MANU) earnings update in March 2019, analyst consensus outlook appear bearish, with profits predicted to drop by 15% next year. However, compared to its 5-year track record of the average earnings growth rate of -37%, this is still an improvement. With trailing-twelve-month net income at current levels of -UK£37.3m, the consensus growth rate suggests that earnings will decline to -UK£31.5m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
What can we expect from Manchester United in the longer term?
The longer term view from the 4 analysts covering MANU is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. 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.
By 2022, MANU's earnings should reach -UK£167.8m, from current levels of -UK£37.3m, resulting in an annual growth rate of 44%. This leads to an EPS of £0.18 in the final year of projections relative to the current EPS of £-0.23. In 2022, MANU's profit margin will have expanded from -6.3% to -25%.
Future outlook is only one aspect when you're building an investment case for a stock. For Manchester United, there are three important aspects you should further research:
- 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 Manchester United 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 Manchester United is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Manchester United? 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 email@example.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.