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What Should Investors Know About Arrow Global Group PLC's (LON:ARW) Future?

Simply Wall St

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Based on Arrow Global Group PLC's (LON:ARW) earnings update in March 2019, it seems that analyst forecasts are fairly optimistic, with earnings expected to grow by 40% in the upcoming year compared with the past 5-year average growth rate of 17%. By 2020, we can expect Arrow Global Group’s bottom line to reach UK£42m, a jump from the current trailing-twelve-month of UK£30m. 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.

See our latest analysis for Arrow Global Group

How will Arrow Global Group perform in the near future?

The longer term view from the 7 analysts covering ARW is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. 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 ARW's earnings growth over these next few years.

LSE:ARW Past and Future Earnings, July 8th 2019

From the current net income level of UK£30m and the final forecast of UK£56m by 2022, the annual rate of growth for ARW’s earnings is 16%. This leads to an EPS of £0.51 in the final year of projections relative to the current EPS of £0.17. With a current profit margin of 9.6%, this movement will result in a margin of 13% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Arrow Global Group, I've compiled three fundamental factors you should look at:

  1. 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.
  2. Valuation: What is Arrow Global 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 Arrow Global Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Arrow Global 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!

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.