Halfords Group plc (LON:HFD): What Does The Future Look Like?
The latest earnings update Halfords Group plc (LON:HFD) released in March 2019 suggested that the business faced a major headwind with earnings declining by -23%. Below is a brief commentary on my key takeaways on how market analysts predict Halfords Group's earnings growth trajectory over the next few years and whether the future looks brighter. 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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Check out our latest analysis for Halfords Group
Analysts' expectations for this coming year seems buoyant, with earnings increasing by a robust 16%. This growth seems to continue into the following year with rates reaching double digit 22% compared to today’s earnings, and finally hitting UK£57m by 2022.
Although it’s informative understanding the growth year by year relative to today’s level, it may be more valuable to evaluate the rate at which the company is growing on average every year. The advantage of this approach is that we can get a bigger picture of the direction of Halfords Group'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 put 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 9.5%. This means, we can expect Halfords Group will grow its earnings by 9.5% every year for the next few years.
Next Steps:
For Halfords Group, there are three fundamental factors 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 HFD 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 HFD is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of HFD? 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.
