In This Article:
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
In December 2018, G8 Education Limited (ASX:GEM) announced its earnings update. Overall, the consensus outlook from analysts appear fairly confident, with profits predicted to increase by 23% next year against the past 5-year average growth rate of 12%. Currently with trailing-twelve-month earnings of AU$72m, we can expect this to reach AU$88m by 2020. Below is a brief commentary on the longer term outlook the market has for G8 Education. For those interested in more of an analysis of the company, you can research its fundamentals here.
See our latest analysis for G8 Education
Exciting times ahead?
The longer term view from the 12 analysts covering GEM is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for GEM, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 14% based on the most recent earnings level of AU$72m to the final forecast of AU$112m by 2022. This leads to an EPS of A$0.25 in the final year of projections relative to the current EPS of A$0.16. With a current profit margin of 8.4%, this movement will result in a margin of 10% by 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For G8 Education, there are three key aspects you should further research:
-
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.
-
Valuation: What is G8 Education 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 G8 Education is currently mispriced by the market.
-
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of G8 Education? 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.