In December 2018, Informa plc (LON:INF) announced its earnings update. Overall, the consensus outlook from analysts appear highly confident, as a 92% rise in profits is expected in the upcoming year, against the previous 5-year average growth rate of 33%. By 2020, we can expect Informa’s bottom line to reach UK£399m, a jump from the current trailing-twelve-month of UK£208m. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Informa in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Can we expect Informa to keep growing?
Over the next three years, it seems the consensus view of the 17 analysts covering INF is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 20% based on the most recent earnings level of UK£208m to the final forecast of UK£493m by 2022. This leads to an EPS of £0.39 in the final year of projections relative to the current EPS of £0.20. With a current profit margin of 8.8%, this movement will result in a margin of 16% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Informa, there are three pertinent factors 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 Informa 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 Informa is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Informa? 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.