Vita Group Limited’s (ASX:VTG) earnings per share contraction is expected to be a double-digit -41.05% over the next three years. With the recent EPS being A$0.256, expected contraction will drag down the upcoming EPS to A$0.151. To determine whether this negative growth rate expectation is justified, we should take a look at how the company has been performing in the past. Check out our latest analysis for Vita Group
Adverse times ahead
The bad news for investors of VTG is that a drop in earnings is on the cards. This is based on 4 analysts who estimate earnings dropping to A$0.151 from previous levels of around A$0.256. This would be a drop of -41.05%, so it will be an interesting ride for any existing shareholders over the next couple of years. In the same period revenue is predicted to increase from A$675M to A$687M and net income is predicted to decline from A$39M to A$23M in the next couple of years. In addition to this, at the current levels of revenue and profit, margins are certainly underwhelming.
Is this similar growth to the past?
The past can be a helpful indicator for future performance for a stock. We can determine whether this level of expected growth is relatively justified or whether the negative sentiment is too pessimistic. VTG is expected to face a massive swing from a previous double-digit growth of 210.50%, over the last five years, to a forecast double-digit decline by analysts. This is highly unencouraging and may be a sign of an investment period for VTG, incurring higher expense growth than revenue.
Next Steps:
For VTG, I’ve compiled three fundamental factors you should further research:
1. 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.
2. Valuation: What is VTG 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 VTG is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of VTG? 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 pass 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.