Avenue Supermarts Limited (NSE:DMART): What Are The Future Prospects?

Simply Wall St

Based on Avenue Supermarts Limited's (NSE:DMART) earnings update on 31 March 2019, the consensus outlook from analysts appear fairly confident, with earnings growth rate expected to be 34% in the upcoming year, relative to the past five-year average earnings growth of 34% per year. With trailing-twelve-month net income at current levels of ₹9.0b, we should see this rise to ₹12b in 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Avenue Supermarts in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

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View our latest analysis for Avenue Supermarts

What can we expect from Avenue Supermarts in the longer term?

Longer term expectations from the 13 analysts covering DMART’s stock is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NSEI:DMART Past and Future Earnings, May 16th 2019

From the current net income level of ₹9.0b and the final forecast of ₹21b by 2022, the annual rate of growth for DMART’s earnings is 24%. This leads to an EPS of ₹33.98 in the final year of projections relative to the current EPS of ₹14.46. With a current profit margin of 4.5%, this movement will result in a margin of 5.0% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Avenue Supermarts, I've put together three key factors you should look at:

  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 Avenue Supermarts 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 Avenue Supermarts is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Avenue Supermarts? 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.