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The most recent earnings release MyState Limited’s (ASX:MYS) announced in June 2018 showed that the company experienced a small tailwind, eventuating to a single-digit earnings growth of 4.6%. Below, I’ve laid out key growth figures on how market analysts perceive MyState’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’ prospects for next year seems rather subdued, with earnings expanding by a single digit 4.3%. The growth outlook in the following year seems much more optimistic with rates generating double digit 11% compared to today’s earnings, and finally hitting AU$37m by 2021.
While it is helpful to be aware of the growth each year relative to today’s level, it may be more beneficial to estimate 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 MyState’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 5.4%. This means, we can anticipate MyState will grow its earnings by 5.4% every year for the next couple of years.
For MyState, I’ve compiled 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 MYS 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 MYS is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MYS? 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 email@example.com.