Based on SEEK Limited's (ASX:SEK) earnings update on 30 June 2019, analysts seem cautiously optimistic, as a 14% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of -14%. By 2020, we can expect SEEK’s bottom line to reach AU$205m, a jump from the current trailing-twelve-month of AU$180m. Below is a brief commentary on the longer term outlook the market has for SEEK. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Can we expect SEEK to keep growing?
Longer term expectations from the 9 analysts covering SEK’s stock is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of AU$180m and the final forecast of AU$370m by 2022, the annual rate of growth for SEK’s earnings is 21%. This leads to an EPS of A$1.05 in the final year of projections relative to the current EPS of A$0.51. With a current profit margin of 12%, this movement will result in a margin of 15% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For SEEK, there are three pertinent aspects 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 SEEK 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 SEEK is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SEEK? 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 firstname.lastname@example.org. 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.