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The most recent earnings announcement SpartanNash Company's (NASDAQ:SPTN) released in December 2018 confirmed that the business turned profitable again after experiencing losses in the previous financial year. Investors may find it useful to understand how market analysts view SpartanNash's earnings growth outlook over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts' expectations for the upcoming year seems buoyant, with earnings growing by a significant 53%. This strong growth in earnings is expected to continue, bringing the bottom line up to US$71m by 2022.
Although it is useful to understand the rate of growth each year relative to today’s value, it may be more valuable to gauge the rate at which the earnings are moving on average every year. The advantage of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of SpartanNash'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 analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 26%. This means, we can assume SpartanNash will grow its earnings by 26% every year for the next few years.
For SpartanNash, I've put together three important factors you should further research:
- 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 SPTN 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 SPTN is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SPTN? 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.