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Technology One Limited (ASX:TNE): What's The Analyst Consensus Outlook?

Simply Wall St

In September 2018, Technology One Limited (ASX:TNE) announced its latest earnings update, which indicated that the company experienced a robust tailwind, leading to a double-digit earnings growth of 15%. Below is a brief commentary on my key takeaways on how market analysts perceive Technology One's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

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Check out our latest analysis for Technology One

Market analysts' consensus outlook for next year seems optimistic, with earnings increasing by a robust 16%. This growth seems to continue into the following year with rates reaching double digit 33% compared to today’s earnings, and finally hitting AU$77m by 2022.

ASX:TNE Past and Future Earnings, May 15th 2019

While it’s informative understanding the growth rate year by year relative to today’s figure, it may be more valuable determining the rate at which the earnings are rising or falling every year, on average. The benefit of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Technology One's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've appended 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 14%. This means that, we can assume Technology One will grow its earnings by 14% every year for the next few years.

Next Steps:

For Technology One, I've put together three relevant factors 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 TNE 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 TNE is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of TNE? 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.