Yahoo Finance Direct Line Insurance Group plc (LON:DLG): What Are The Future Prospects?
In June 2018, Direct Line Insurance Group plc (LON:DLG) announced its earnings update. Overall, the consensus outlook from analysts appear fairly confident, with earnings expected to grow by 9.0% in the upcoming year compared with the past 5-year average growth rate of 4.5%. With trailing-twelve-month net income at current levels of UK£434m, we should see this rise to UK£473m in 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Check out our latest analysis for Direct Line Insurance Group
Can we expect Direct Line Insurance Group to keep growing?
The longer term expectations from the 11 analysts of DLG is tilted towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of DLG’s earnings growth over these next few years.
By 2021, DLG’s earnings should reach UK£468m, from current levels of UK£434m, resulting in an annual growth rate of 0.7%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of £0.30 in the final year of forecast compared to the current £0.32 EPS today. Growth in earnings appears to be a result of reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. Margins is currently sitting at 13%, which is expected to expand to 15% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Direct Line Insurance Group, I’ve compiled three important factors 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 Direct Line Insurance Group 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 Direct Line Insurance Group is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Direct Line Insurance Group? 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.
