How Do Analysts See Mainstream Group Holdings Limited (ASX:MAI) Performing Over The Next Few Years?
Mainstream Group Holdings Limited’s (ASX:MAI) latest earnings update in June 2018 confirmed that the business experienced a strong tailwind, leading to a double-digit earnings growth of 22%. Today I want to provide a brief commentary on how market analysts predict Mainstream Group Holdings’s earnings growth outlook over the next couple of 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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Analysts’ outlook for next year seems optimistic, with earnings increasing by a significant 82%. This strong growth in earnings is expected to continue, bringing the bottom line up to AU$4.8m by 2022.
While it is informative understanding the growth rate each year relative to today’s value, it may be more beneficial to determine the rate at which the business is moving every year, on average. The benefit of this technique is that we can get a better picture of the direction of Mainstream Group Holdings’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted 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 27%. This means that, we can anticipate Mainstream Group Holdings will grow its earnings by 27% every year for the next couple of years.
Next Steps:
For Mainstream Group Holdings, I’ve compiled three relevant aspects you should further examine:
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 MAI 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 MAI is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MAI? 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 editorial-team@simplywallst.com.
