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In June 2018, EBOS Group Limited (NZSE:EBO) announced its earnings update. Overall, analysts seem cautiously bearish, with earnings expected to grow by 5.9% in the upcoming year relative to the higher past 5-year average growth rate of 19%. Currently with trailing-twelve-month earnings of NZ$150m, we can expect this to reach NZ$158m by 2019. Below is a brief commentary on the longer term outlook the market has for EBOS Group. For those interested in more of an analysis of the company, you can research its fundamentals here.
View our latest analysis for EBOS Group
How will EBOS Group perform in the near future?
Longer term expectations from the 6 analysts covering EBO’s stock 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. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of EBO’s earnings growth over these next few years.
By 2021, EBO’s earnings should reach NZ$196m, from current levels of NZ$150m, resulting in an annual growth rate of 8.8%. EPS reaches NZ$1.29 in the final year of forecast compared to the current NZ$0.98 EPS today. Growth in earnings appears to be a result of cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. With a current profit margin of 2.0%, this movement will result in a margin of 2.1% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For EBOS Group, I’ve compiled three pertinent factors you should further research:
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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 EBOS Group 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 EBOS Group 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 EBOS Group? 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.