SpaceandPeople plc (LON:SAL): Are Analysts Right About The Drop In Earnings?

In December 2017, SpaceandPeople plc (LON:SAL) released its most recent earnings announcement, which signalled that the company turned profitable again after incurring negative earnings in the previous financial year. Below, I’ve laid out key numbers on how market analysts perceive SpaceandPeople’s earnings growth outlook over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. See our latest analysis for SpaceandPeople

Analysts’ expectations for the upcoming year seems pessimistic, with earnings reducing by -8.90%. Over the medium term, earnings should continue to be below today’s level, with a reduction of -12.66% in 2020, eventually reaching UK£800.00k in 2021.

AIM:SAL Future Profit June 22nd 18

Although it’s informative knowing the growth year by year relative to today’s level, it may be more valuable to analyze the rate at which the business is moving every year, on average. The advantage of this method is that we can get a bigger picture of the direction of SpaceandPeople’s earnings trajectory over the long run, irrespective of near term fluctuations, fluctuate up and down. To calculate this rate, I’ve inserted 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 -0.67%. This means that, we can expect SpaceandPeople will chip away at a rate of -0.67% every year for the next couple of years.

Next Steps:

For SpaceandPeople, I’ve put together three important factors you should further examine:

1. 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.

2. Valuation: What is SAL 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 SAL is currently mispriced by the market.

3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SAL? 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.