In This Article:
The latest earnings update Helloworld Travel Limited (ASX:HLO) released in June 2018 revealed that the company gained from a robust tailwind, eventuating to a double-digit earnings growth of 48%. Today I want to provide a brief commentary on how market analysts view Helloworld Travel’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.
Check out our latest analysis for Helloworld Travel
Market analysts’ consensus outlook for this coming year seems positive, with earnings rising by a robust 31%. This growth seems to continue into the following year with rates arriving at double digit 51% compared to today’s earnings, and finally hitting AU$52m by 2021.
Even though it’s useful to understand the growth rate each year relative to today’s figure, it may be more insightful analyzing the rate at which the business is growing on average every year. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of Helloworld Travel’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 15%. This means that, we can expect Helloworld Travel will grow its earnings by 15% every year for the next few years.
Next Steps:
For Helloworld Travel, there are three fundamental 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 HLO 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 HLO 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 HLO? 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.