As Topps Tiles Plc (LON:TPT) released its earnings announcement on 29 September 2018, the consensus outlook from analysts appear fairly confident, with earnings expected to grow by 33% in the upcoming year relative to the past 5-year average growth rate of 1.2%. With trailing-twelve-month net income at current levels of UK£9.7m, we should see this rise to UK£13m in 2020. Below is a brief commentary around Topps Tiles’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
How is Topps Tiles going to perform in the near future?
The longer term expectations from the 4 analysts of TPT is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of TPT’s earnings growth over these next few years.
From the current net income level of UK£9.7m and the final forecast of UK£14m by 2022, the annual rate of growth for TPT’s earnings is 10%. This leads to an EPS of £0.070 in the final year of projections relative to the current EPS of £0.050. Margins are currently sitting at 4.5%, which is expected to expand to 6.1% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Topps Tiles, there are three key 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 Topps Tiles 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 Topps Tiles is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Topps Tiles? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.