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Based on Collins Foods Limited's (ASX:CKF) earnings update in October 2018, it seems that analyst expectations are fairly bearish, with profits predicted to rise by 12% next year compared with the higher past 5-year average growth rate of 33%. Presently, with latest-twelve-month earnings at AU$32m, we should see this growing to AU$36m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
See our latest analysis for Collins Foods
What can we expect from Collins Foods in the longer term?
The 5 analysts covering CKF view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of AU$32m and the final forecast of AU$46m by 2022, the annual rate of growth for CKF’s earnings is 11%. EPS reaches A$0.50 in the final year of forecast compared to the current A$0.28 EPS today. Margins are currently sitting at 4.2%, which is expected to expand to 4.5% by 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Collins Foods, I've compiled three essential aspects you should look at:
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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 Collins Foods 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 Collins Foods 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 Collins Foods? 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.