Premier Investments Limited’s (ASX:PMV) announced its latest earnings update in July 2017, which confirmed that the company benefited from a small tailwind, eventuating to a single-digit earnings growth of 1.21%. Below is a brief commentary on my key takeaways on how market analysts predict Premier Investments’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. 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. Check out our latest analysis for Premier Investments
Analysts’ outlook for the coming year seems buoyant, with earnings rising by a robust 16.19%. This growth seems to continue into the following year with rates reaching double digit 30.57% compared to today’s earnings, and finally hitting A$154.7M by 2020.
Although it’s useful to be aware of the growth year by year relative to today’s figure, it may be more valuable determining the rate at which the business is moving on average every year. The benefit of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Premier Investments’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 the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 12.63%. This means, we can assume Premier Investments will grow its earnings by 12.63% every year for the next few years.
Next Steps:
For Premier Investments, there are three essential aspects you should look at:
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 PMV 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 PMV is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of PMV? 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.