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TFF Group’s (EPA:TFF) most recent earnings update in April 2018 showed that the business endured a slight headwind with earnings deteriorating from €32m to €30m, a change of -5.8%. Below is a brief commentary on my key takeaways on how market analysts predict TFF Group’s earnings growth outlook over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
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Market analysts’ prospects for the upcoming year seems optimistic, with earnings growing by a robust 27%. This growth seems to continue into the following year with rates arriving at double digit 45% compared to today’s earnings, and finally hitting €47m by 2022.
While it is helpful to be aware of the growth rate each year relative to today’s level, it may be more valuable to estimate the rate at which the company is growing on average every year. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of TFF Group’s earnings trajectory over time, which may be more relevant for long term investors. To calculate 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 14%. This means that, we can assume TFF Group will grow its earnings by 14% every year for the next few years.
Next Steps:
For TFF Group, there are three essential 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 TFF 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 TFF 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 TFF? 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.