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National Australia Bank Limited (ASX:NAB): Will The Growth Last?

Simply Wall St

Looking at National Australia Bank Limited's (ASX:NAB) earnings update in March 2019, analysts seem cautiously optimistic, with earnings expected to grow by 6.2% in the upcoming year compared with the past 5-year average growth rate of 1.9%. By 2020, we can expect National Australia Bank’s bottom line to reach AU$6.2b, a jump from the current trailing-twelve-month of AU$5.8b. Below is a brief commentary around National Australia Bank's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

Check out our latest analysis for National Australia Bank

Exciting times ahead?

The longer term view from the 12 analysts covering NAB is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for NAB, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

ASX:NAB Past and Future Earnings, August 9th 2019

By 2022, NAB's earnings should reach AU$7.2b, from current levels of AU$5.8b, resulting in an annual growth rate of 8.8%. EPS reaches A$2.39 in the final year of forecast compared to the current A$2.16 EPS today. With a current profit margin of 32%, this movement will result in a margin of 36% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For National Australia Bank, I've compiled three important aspects you should further research:

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