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Will Super Retail Group Limited's (ASX:SUL) Earnings Grow Over The Next Year?

Simply Wall St

In December 2018, Super Retail Group Limited (ASX:SUL) announced its earnings update. Overall, the consensus outlook from analysts appear fairly confident, with earnings expected to grow by 14% in the upcoming year compared with the past 5-year average growth rate of 3.2%. Currently with trailing-twelve-month earnings of AU$128m, we can expect this to reach AU$146m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.

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See our latest analysis for Super Retail Group

Can we expect Super Retail Group to keep growing?

The longer term view from the 12 analysts covering SUL is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. 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.

ASX:SUL Past and Future Earnings, May 21st 2019

From the current net income level of AU$128m and the final forecast of AU$166m by 2022, the annual rate of growth for SUL’s earnings is 8.5%. This leads to an EPS of A$0.83 in the final year of projections relative to the current EPS of A$0.65. Margins are currently sitting at 5.0%, which is expected to expand to 5.7% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Super Retail Group, there are three essential aspects you should further examine:

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