Coats Group plc (LON:COA): What We Can Expect From This Growth Stock

In June 2019, Coats Group plc (LON:COA) announced its earnings update. Overall, it seems that analyst forecasts are fairly optimistic, with earnings expected to grow by 47% in the upcoming year relative to the past 5-year average growth rate of 26%. Presently, with latest-twelve-month earnings at US$55m, we should see this growing to US$81m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Coats Group in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

View our latest analysis for Coats Group

Can we expect Coats Group to keep growing?

Longer term expectations from the 5 analysts covering COA’s stock is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of COA's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

LSE:COA Past and Future Earnings, September 13th 2019
LSE:COA Past and Future Earnings, September 13th 2019

By 2022, COA's earnings should reach US$94m, from current levels of US$55m, resulting in an annual growth rate of 11%. EPS reaches $0.085 in the final year of forecast compared to the current $0.039 EPS today. With a current profit margin of 3.9%, this movement will result in a margin of 6.1% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Coats Group, I've put together three pertinent factors you should further examine:

  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 Coats Group 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 Coats Group is currently mispriced by the market.

  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Coats Group? 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.