Yahoo Finance Legal & General Group Plc (LON:LGEN): Will The Growth Last?
Legal & General Group Plc’s (LSE:LGEN) released its most recent earnings update in December 2017, which showed that the business gained from a large tailwind, eventuating to a high double-digit earnings growth of 55.18%. Investors may find it useful to understand how market analysts view Legal & General Group’s earnings growth trajectory over the next few 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 Legal & General Group
Market analysts’ prospects for this coming year seems pessimistic, with earnings reducing by a double-digit -10.17%. However, the following year shows a contrast, with earnings growth becoming positive at 4.02% compared to today’s earnings level. Earnings are then expected to reduce to UK£1.75B in 2021.
Even though it is informative understanding the growth each year relative to today’s level, it may be more insightful to determine the rate at which the earnings are growing on average every year. The advantage of this method is that it ignores near term flucuations and accounts for the overarching direction of Legal & General Group’s earnings trajectory over time, be more volatile. To compute 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 1.83%. This means that, we can anticipate Legal & General Group will grow its earnings by 1.83% every year for the next few years.
Next Steps:
For Legal & General Group, I’ve compiled three key factors you should further examine:
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 LGEN 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 LGEN is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of LGEN? 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 pass 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.
