Yahoo Finance The Sage Group plc (LON:SGE): Immense Growth Potential?
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In September 2018, The Sage Group plc (LON:SGE) announced its most recent earnings update, which suggested that the business experienced a strong tailwind, eventuating to a double-digit earnings growth of 15%. Below is my commentary, albeit very simple and high-level, on how market analysts view Sage Group's earnings growth outlook over the next few 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.
View our latest analysis for Sage Group
Analysts' expectations for this coming year seems rather subdued, with earnings rising by a single digit 0.9%. The following year doesn't look much more exciting, though earnings does reach UK£347m in 2022.
Although it’s useful to understand the growth year by year relative to today’s figure, it may be more beneficial estimating the rate at which the company is rising or falling on average every year. The pro of this method is that we can get a better picture of the direction of Sage Group'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 put 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 7.5%. This means that, we can presume Sage Group will grow its earnings by 7.5% every year for the next few years.
Next Steps:
For Sage Group, I've compiled three key 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 SGE 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 SGE is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SGE? 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.
