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In May 2019, Vertu Motors plc (LON:VTU) announced its most recent earnings update, which suggested that the company faced a major headwind with earnings declining by -17%. Below, I've laid out key growth figures on how market analysts predict Vertu Motors'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 Vertu Motors
Analysts' outlook for the upcoming year seems pessimistic, with earnings reducing by -4.5%. But in the following year, there is a complete contrast in performance, with arriving at double digit 3.2% compared to today’s level and continues to increase to UK£22m in 2022.
While it is informative knowing the growth each year relative to today’s level, it may be more valuable to evaluate the rate at which the earnings are rising or falling on average every year. The advantage of this method is that it ignores near term flucuations and accounts for the overarching direction of Vertu Motors's earnings trajectory over time, 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 2.7%. This means, we can anticipate Vertu Motors will grow its earnings by 2.7% every year for the next few years.
Next Steps:
For Vertu Motors, I've compiled three relevant factors 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 VTU 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 VTU 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 VTU? 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.