Premier Investments Limited (ASX:PMV): Is It A Smart Long Term Opportunity?
After Premier Investments Limited’s (ASX:PMV) earnings announcement in July 2018, it seems that analyst forecasts are substantially optimistic, with earnings expected to grow by a high double-digit of 56% in the upcoming year, relative to the historical 5-year average growth rate of -8.3%. Currently with trailing-twelve-month earnings of AU$84m, we can expect this to reach AU$130m by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Premier Investments in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Check out our latest analysis for Premier Investments
How will Premier Investments perform in the near future?
The view from 9 analysts over the next three years 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 get an idea of the overall earnings growth trend for PMV, 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.
From the current net income level of AU$84m and the final forecast of AU$173m by 2021, the annual rate of growth for PMV’s earnings is 19%. EPS reaches A$1.1 in the final year of forecast compared to the current A$0.53 EPS today. With a current profit margin of 7.0%, this movement will result in a margin of 12% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Premier Investments, I’ve compiled three relevant 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 Premier Investments 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 Premier Investments is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Premier Investments? 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.
