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In August 2019, Infomedia Ltd (ASX:IFM) announced its latest earnings update, which indicated that the company gained from a robust tailwind, leading to a double-digit earnings growth of 25%. Investors may find it useful to understand how market analysts perceive Infomedia's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
View our latest analysis for Infomedia
Analysts' expectations for the upcoming year seems optimistic, with earnings growing by a robust 17%. This growth seems to continue into the following year with rates arriving at double digit 41% compared to today’s earnings, and finally hitting AU$27m by 2022.
While it’s useful to be aware of the growth rate each year relative to today’s value, it may be more insightful evaluating the rate at which the earnings are rising or falling every year, on average. The advantage of this approach is that we can get a bigger picture of the direction of Infomedia'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'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 17%. This means that, we can anticipate Infomedia will grow its earnings by 17% every year for the next couple of years.
Next Steps:
For Infomedia, I've compiled three important aspects you should look at:
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Valuation: What is IFM 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 IFM is currently mispriced by the market.
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Future Earnings: How does IFM's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
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Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of IFM? 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.