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Will National Veterinary Care Ltd's (ASX:NVL) Earnings Grow In The Year Ahead?

Simply Wall St

On 30 June 2019, National Veterinary Care Ltd (ASX:NVL) announced its earnings update. Overall, it seems that analyst forecasts are fairly optimistic, with earnings expected to grow by 25% in the upcoming year, though this is evidently lower than the historical 5-year average earnings growth of 53%. With trailing-twelve-month net income at current levels of AU$8.0m, we should see this rise to AU$10m in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for National Veterinary Care

Exciting times ahead?

The longer term view from the 3 analysts covering NVL is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of NVL's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

ASX:NVL Past and Future Earnings, August 27th 2019

From the current net income level of AU$8.0m and the final forecast of AU$16m by 2022, the annual rate of growth for NVL’s earnings is 21%. EPS reaches A$0.24 in the final year of forecast compared to the current A$0.12 EPS today. Margins are currently sitting at 6.8%, which is expected to expand to 8.8% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For National Veterinary Care, I've put together 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 Veterinary Care 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 Veterinary Care is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of National Veterinary Care? 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.