Yahoo Finance What Should You Know About Paragon Banking Group PLC’s (LON:PAG) Earnings Trend?
Paragon Banking Group PLC’s (LON:PAG) announced its latest earnings update in September 2018, which confirmed that the business benefited from a robust tailwind, eventuating to a double-digit earnings growth of 24%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive Paragon Banking Group’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
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Market analysts’ prospects for this coming year seems pessimistic, with earnings declining by -7.9%. But in the following year, there is a complete contrast in performance, with arriving at double digit 2.0% compared to today’s level and continues to increase to UK£161m in 2022.
While it is informative knowing the rate of growth each year relative to today’s level, it may be more insightful estimating the rate at which the company is rising or falling on average every year. The benefit of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Paragon Banking Group’s earnings trajectory over time, which may be more relevant for long term investors. To calculate 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 3.9%. This means, we can anticipate Paragon Banking Group will grow its earnings by 3.9% every year for the next few years.
Next Steps:
For Paragon Banking Group, there are three fundamental 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 PAG 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 PAG is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of PAG? 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.
