Yahoo Finance Card Factory plc (LON:CARD): Immense Growth Potential?
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Card Factory plc's (LON:CARD) released its most recent earnings update in May 2019, which signalled that the business faced a substantial headwind with earnings deteriorating by -12%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive Card Factory's earnings growth trajectory over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Check out our latest analysis for Card Factory
Analysts' expectations for next year seems rather muted, with earnings climbing by a single digit 9.0%. The growth outlook in the following year seems much more positive with rates generating double digit 12% compared to today’s earnings, and finally hitting UK£59m by 2022.
Even though it is useful to understand the growth year by year relative to today’s figure, it may be more valuable analyzing the rate at which the earnings are rising or falling every year, on average. The advantage of this method is that we can get a bigger picture of the direction of Card Factory'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 the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 4.6%. This means, we can expect Card Factory will grow its earnings by 4.6% every year for the next few years.
Next Steps:
For Card Factory, I've put together three relevant aspects you should further research:
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 CARD 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 CARD is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CARD? 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.
