Yahoo Finance NEXT plc (LON:NXT): Will The Growth Last?
As NEXT plc (LON:NXT) released its earnings announcement on 26 January 2019, analyst consensus outlook appear cautiously subdued, as a -1.1% rise in profits is expected in the upcoming year, relative to the higher past 5-year average growth rate of -0.3%. With trailing-twelve-month net income at current levels of UK£590m, we should see this rise to UK£584m in 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for NEXT in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Check out our latest analysis for NEXT
Exciting times ahead?
The 15 analysts covering NXT view its longer term outlook with a positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. 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.
From the current net income level of UK£590m and the final forecast of UK£597m by 2022, the annual rate of growth for NXT’s earnings is 0.3%. EPS reaches £4.87 in the final year of forecast compared to the current £4.35 EPS today. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 14% to 13% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For NEXT, I've put together three relevant 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 NEXT 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 NEXT is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of NEXT? 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.
