After National Veterinary Care Ltd’s (ASX:NVL) earnings announcement in June 2018, the consensus outlook from analysts appear fairly confident, with profits predicted to increase by 36% next year, though this is comparatively lower than the past 5-year average earnings growth of 74%. Presently, with latest-twelve-month earnings at AU$6m, we should see this growing to AU$8m by 2019. Below is a brief commentary on the longer term outlook the market has for National Veterinary Care. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
See our latest analysis for National Veterinary Care
Can we expect National Veterinary Care to keep growing?
The view from 3 analysts over the next three years is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for NVL, 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 19% based on the most recent earnings level of AU$6m to the final forecast of AU$11m by 2021. EPS reaches A$0.17 in the final year of forecast compared to the current A$0.11 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. Margins is currently sitting at 7.4%, which is expected to expand to 7.8% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For National Veterinary Care, there are three essential factors 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 National Veterinary Care 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 National Veterinary Care 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 National Veterinary Care? 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.