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A.P. Eagers Limited's (ASX:APE) released its most recent earnings update in February 2019, which indicated that the business gained from a slight tailwind, eventuating to a single-digit earnings growth of 3.7%. Below, I've laid out key numbers on how market analysts perceive A.P. Eagers'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.
See our latest analysis for A.P. Eagers
Market analysts' prospects for next year seems pessimistic, with earnings declining by a double-digit -17%. Over the medium term, earnings will begin to improve, increasing year on year, and reaching AU$101m by 2022.
While it is helpful to be aware of the rate of growth year by year relative to today’s level, it may be more beneficial to gauge the rate at which the business is moving every year, on average. The pro of this approach is that we can get a better picture of the direction of A.P. Eagers's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I've inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 6.2%. This means that, we can presume A.P. Eagers will grow its earnings by 6.2% every year for the next few years.
Next Steps:
For A.P. Eagers, I've compiled three relevant aspects 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 APE 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 APE 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 APE? 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.