National Beverage Corp.'s (NASDAQ:FIZZ) most recent earnings update in June 2019 confirmed that the company experienced a minor headwind with earnings deteriorating from US$150m to US$141m, a change of -6.0%. Investors may find it useful to understand how market analysts view National Beverage's earnings growth outlook over the next couple of 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.
Market analysts' consensus outlook for the upcoming year seems pessimistic, with earnings falling by a double-digit -16%. Beyond this, earnings should continue to be below today's level, with a decline of -18% in 2021, eventually reaching US$115m in 2022.
Although it is informative knowing the growth year by year relative to today’s level, it may be more valuable determining the rate at which the earnings are rising or falling on average every year. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of National Beverage's earnings trajectory over time, be more volatile. To compute 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 -11%. This means, we can presume National Beverage will chip away at a rate of -11% every year for the next couple of years.
For National Beverage, there are three key factors you should further examine:
- 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 FIZZ 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 FIZZ is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of FIZZ? 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.