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Moelis Australia Limited (ASX:MOE): Immense Growth Potential?

Simply Wall St

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Moelis Australia Limited's (ASX:MOE) released its most recent earnings update in December 2018, which suggested that the business endured a minor headwind with earnings declining from AU$30m to AU$29m, a change of -0.6%. Investors may find it useful to understand how market analysts perceive Moelis Australia's earnings growth trajectory over the next few years and whether the future looks brighter. 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 Moelis Australia

Analysts' expectations for the upcoming year seems optimistic, with earnings rising by a robust 11%. This growth seems to continue into the following year with rates reaching double digit 47% compared to today’s earnings, and finally hitting AU$50m by 2022.

ASX:MOE Past and Future Earnings, June 6th 2019

Even though it is useful to understand the rate of growth year by year relative to today’s level, it may be more beneficial to estimate the rate at which the company is rising or falling on average every year. The advantage of this technique is that we can get a bigger picture of the direction of Moelis Australia's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate 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 19%. This means, we can expect Moelis Australia will grow its earnings by 19% every year for the next few years.

Next Steps:

For Moelis Australia, there are three important factors you should look at:

  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 MOE 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 MOE is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MOE? 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.