In June 2018, LiveHire Limited (ASX:LVH) released its latest earnings announcement, which signalled that losses became smaller relative to the prrior year’s level – great news for investors Investors may find it useful to understand how market analysts predict LiveHire’s earnings growth outlook 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.
Check out our latest analysis for LiveHire
Analysts’ outlook for next year seems pessimistic, with earnings becoming even more negative, arriving at -AU$13.5m in 2019. In addition, earnings are expected to fall off in the following year, declining to -AU$8.8m in 2020 and -AU$8.5m in 2021.
Although it’s helpful to understand the growth rate year by year relative to today’s figure, it may be more beneficial to evaluate the rate at which the earnings are rising or falling every year, on average. The advantage of this method is that we can get a bigger picture of the direction of LiveHire’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 the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 39.8%. This means that, we can presume LiveHire will grow its earnings by 39.8% every year for the next few years.
Next Steps:
For LiveHire, there are three important aspects 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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Management:Have insiders been ramping up their shares to take advantage of the market’s sentiment for LVH’s future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
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Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of LVH? 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.