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On 30 September 2018, National Australia Bank Limited (ASX:NAB) announced its earnings update. Overall, the consensus outlook from analysts appear fairly confident, with earnings expected to grow by 14% in the upcoming year against the past 5-year average growth rate of 3.2%. By 2019, we can expect National Australia Bank’s bottom line to reach AU$6.6b, a jump from the current trailing-twelve-month AU$5.8b. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for National Australia Bank in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
See our latest analysis for National Australia Bank
How is National Australia Bank going to perform in the near future?
Longer term expectations from the 12 analysts covering NAB’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. To get an idea of the overall earnings growth trend for NAB, 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.
From the current net income level of AU$5.8b and the final forecast of AU$7.5b by 2021, the annual rate of growth for NAB’s earnings is 8.2%. EPS reaches A$2.55 in the final year of forecast compared to the current A$2.16 EPS today. The bottom-line growth seems to be caused by cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. In 2021, NAB’s profit margin will have expanded from 32% to 38%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For National Australia Bank, I’ve compiled three key 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 National Australia Bank 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 Australia Bank 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 Australia Bank? 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.