What Do Analysts Think About Metcash Limited's (ASX:MTS) Growth?
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On 30 April 2019, Metcash Limited (ASX:MTS) released its earnings update. Generally, the consensus outlook from analysts appear somewhat bearish, with profits predicted to rise by 3.4% next year relative to the higher past 5-year average growth rate of 4.7%. With trailing-twelve-month net income at current levels of AU$193m, we should see this rise to AU$199m in 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Metcash in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Check out our latest analysis for Metcash
What can we expect from Metcash in the longer term?
The 10 analysts covering MTS view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for MTS, 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.
This results in an annual growth rate of 4.2% based on the most recent earnings level of AU$193m to the final forecast of AU$213m by 2022. EPS reaches A$0.23 in the final year of forecast compared to the current A$0.21 EPS today. With a current profit margin of 1.5%, this movement will result in a margin of 1.6% by 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Metcash, I've put together three pertinent 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 Metcash 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 Metcash is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Metcash? 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.
