In June 2018, Swallowfield plc (LON:SWL) released its latest earnings announcement, which suggested that the company experienced a strong tailwind, eventuating to a double-digit earnings growth of 39%. Below, I’ve laid out key numbers on how market analysts perceive Swallowfield’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts’ consensus outlook for the coming year seems buoyant, with earnings growing by a robust 27%. This growth seems to continue into the following year with rates arriving at double digit 38% compared to today’s earnings, and finally hitting UK£5m by 2021.
Although it is helpful to be aware of the growth rate each year relative to today’s level, it may be more beneficial to gauge the rate at which the company is moving on average every year. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Swallowfield’s earnings trajectory over time, which may be more relevant for long term investors. To calculate 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 14%. This means, we can assume Swallowfield will grow its earnings by 14% every year for the next couple of years.
For Swallowfield, I’ve compiled three pertinent factors you should further examine:
- 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 SWL 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 SWL is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SWL? 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 firstname.lastname@example.org.