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In August 2019, Austal Limited (ASX:ASB) announced its latest earnings update, which revealed that the company benefited from a strong tailwind, leading to a high double-digit earnings growth of 64%. Below, I've laid out key growth figures on how market analysts perceive Austal's earnings growth outlook over the next few years and whether the future looks even brighter than the past. 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.
View our latest analysis for Austal
Analysts' outlook for this coming year seems optimistic, with earnings expanding by a robust 20%. This growth seems to continue into the following year with rates reaching double digit 23% compared to today’s earnings, and finally hitting AU$79m by 2022.
While it’s useful to be aware of the growth year by year relative to today’s figure, it may be more insightful to determine the rate at which the business is growing on average every year. The advantage of this approach is that it ignores near term flucuations and accounts for the overarching direction of Austal's earnings trajectory over time, 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 8.3%. This means, we can anticipate Austal will grow its earnings by 8.3% every year for the next few years.
Next Steps:
For Austal, I've put together three pertinent 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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Valuation: What is ASB 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 ASB 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 ASB? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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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.