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Looking at Eddie Stobart Logistics plc's (LON:ESL) earnings update in November 2018, analyst consensus outlook appear vastly optimistic, with profits predicted to ramp up by an impressive 73% next year, against the previous 5-year average growth rate of 28%. Presently, with latest-twelve-month earnings at UK£16m, we should see this growing to UK£28m by 2020. Below is a brief commentary on the longer term outlook the market has for Eddie Stobart Logistics. For those interested in more of an analysis of the company, you can research its fundamentals here.
What can we expect from Eddie Stobart Logistics in the longer term?
The longer term view from the 4 analysts covering ESL is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for ESL, 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 16% based on the most recent earnings level of UK£16m to the final forecast of UK£34m by 2022. This leads to an EPS of £0.089 in the final year of projections relative to the current EPS of £0.044. With a current profit margin of 1.9%, this movement will result in a margin of 3.2% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Eddie Stobart Logistics, I've put together three key aspects you should look at:
- 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.
- Valuation: What is Eddie Stobart Logistics 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 Eddie Stobart Logistics is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Eddie Stobart Logistics? 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 email@example.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.