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The most recent earnings announcement Seven West Media Limited’s (ASX:SWM) released in June 2018 signalled that the business finally turned profitable after delivering negative earnings on average over the last few years. Investors may find it useful to understand how market analysts predict Seven West Media’s earnings growth trajectory over the next few years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Check out our latest analysis for Seven West Media
Analysts’ expectations for this coming year seems optimistic, with earnings increasing by a robust 18%. However, earnings is forecasted to fall thereafter, reaching AU$141m in 2021.
Although it is informative understanding the growth each year relative to today’s level, it may be more beneficial to analyze the rate at which the business is moving on average every year. The pro of this method is that we can get a better picture of the direction of Seven West Media’s earnings trajectory over the long run, irrespective of near term fluctuations, fluctuate up and down. To calculate this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 3.0%. This means, we can anticipate Seven West Media will grow its earnings by 3.0% every year for the next few years.
Next Steps:
For Seven West Media, I’ve compiled three pertinent factors you should further examine:
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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.
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Valuation: What is SWM 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 SWM is currently mispriced by the market.
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Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SWM? 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.