Admiral Group plc (LON:ADM): Are Analysts Bullish?
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The most recent earnings update Admiral Group plc's (LON:ADM) released in December 2018 showed that the company experienced a robust tailwind, eventuating to a double-digit earnings growth of 18%. Below is a brief commentary on my key takeaways on how market analysts predict Admiral Group's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
See our latest analysis for Admiral Group
Market analysts' prospects for the coming year seems pessimistic, with earnings falling by -3.0%. Beyond this, earnings are predicted to continue to be below today's level, with a reduction of -6.9% in 2021, eventually reaching UK£368m in 2022.
Although it is useful to understand the growth rate year by year relative to today’s value, it may be more valuable to evaluate the rate at which the business is rising or falling 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 Admiral Group's earnings trajectory over time, fluctuate up and down. To compute this rate, I've inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 1.7%. This means, we can anticipate Admiral Group will grow its earnings by 1.7% every year for the next couple of years.
Next Steps:
For Admiral Group, I've put together three relevant 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 ADM 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 ADM is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ADM? 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.
