What Should We Expect From EBOS Group Limited’s (NZSE:EBO) Earnings In The Years Ahead?

Felix Olson

The latest earnings announcement EBOS Group Limited (NZSE:EBO) released in June 2018 confirmed that the business benefited from a strong tailwind, leading to a double-digit earnings growth of 12%. Below, I’ve laid out key growth figures on how market analysts view EBOS Group’s earnings growth trajectory over the next few 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.

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Analysts’ expectations for next year seems rather muted, with earnings growing by a single digit 5.2%. The growth outlook in the following year seems much more buoyant with rates arriving at double digit 24% compared to today’s earnings, and finally hitting NZ$196m by 2022.

NZSE:EBO Future Profit January 13th 19
NZSE:EBO Future Profit January 13th 19

While it’s helpful to be aware of the growth each year relative to today’s value, it may be more insightful to determine the rate at which the earnings are moving every year, on average. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of EBOS Group’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended 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 8.8%. This means, we can presume EBOS Group will grow its earnings by 8.8% every year for the next couple of years.

Next Steps:

For EBOS Group, there are three relevant aspects 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 EBO 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 EBO is currently mispriced by the market.

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