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Domino's Pizza Group plc's (LON:DOM) released its most recent earnings update in March 2019, which showed that the business faced a major headwind with earnings falling by -27%. Today I want to provide a brief commentary on how market analysts predict Domino's Pizza Group's earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
See our latest analysis for Domino's Pizza Group
Market analysts' prospects for the upcoming year seems positive, with earnings growing by a robust 49%. This growth seems to continue into the following year with rates reaching double digit 69% compared to today’s earnings, and finally hitting UK£89m by 2022.
While it is helpful to be aware of the growth rate year by year relative to today’s value, it may be more valuable gauging the rate at which the business is moving every year, on average. The advantage of this technique is that we can get a better picture of the direction of Domino's Pizza Group's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate 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 14%. This means that, we can expect Domino's Pizza Group will grow its earnings by 14% every year for the next couple of years.
Next Steps:
For Domino's Pizza Group, I've put together three pertinent aspects you should further examine:
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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.
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Valuation: What is DOM 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 DOM is currently mispriced by the market.
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Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of DOM? 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.