Yahoo Finance ITV plc (LON:ITV): Is It A Good Long Term Opportunity?
In December 2018, ITV plc (LON:ITV) announced its latest earnings update, which signalled that the company gained from a robust tailwind, leading to a double-digit earnings growth of 14%. Below, I’ve laid out key growth figures on how market analysts view ITV’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Check out our latest analysis for ITV
Market analysts’ consensus outlook for the coming year seems pessimistic, with earnings falling by -9.6%. In the next couple of years, earnings are expected to continue to be below today’s level, with a fall of -1.1% in 2021, eventually reaching UK£461m in 2022.
Although it is useful to understand the growth rate each year relative to today’s figure, it may be more insightful estimating the rate at which the business is rising or falling every year, on average. The benefit of this approach is that we can get a bigger picture of the direction of ITV’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 appended 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 2.4%. This means, we can anticipate ITV will grow its earnings by 2.4% every year for the next few years.
Next Steps:
For ITV, I’ve put together three pertinent 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 ITV 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 ITV is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ITV? 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.
