Based on Tabcorp Holdings Limited's (ASX:TAH) earnings update on 30 June 2019, analysts seem cautiously optimistic, with earnings expected to grow by 8.3% in the upcoming year relative to the past 5-year average growth rate of -11%. By 2020, we can expect Tabcorp Holdings’s bottom line to reach AU$403m, a jump from the current trailing-twelve-month of AU$372m. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Tabcorp Holdings in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
What can we expect from Tabcorp Holdings in the longer term?
The view from 11 analysts over the next three years is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for TAH, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
By 2022, TAH's earnings should reach AU$507m, from current levels of AU$372m, resulting in an annual growth rate of 10%. This leads to an EPS of A$0.27 in the final year of projections relative to the current EPS of A$0.18. In 2022, TAH's profit margin will have expanded from 6.8% to 8.7%.
Future outlook is only one aspect when you're building an investment case for a stock. For Tabcorp Holdings, I've compiled three relevant aspects 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 Tabcorp Holdings 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 Tabcorp Holdings is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Tabcorp Holdings? 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.