boohoo group plc’s (LON:BOO) latest earnings announcement in February 2018 indicated that the company gained from a robust tailwind, eventuating to a double-digit earnings growth of 29.4%. Below, I’ve laid out key numbers on how market analysts predict boohoo group’s earnings growth trajectory 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.
View our latest analysis for boohoo group
Analysts’ outlook for the coming year seems optimistic, with earnings growing by a robust 32.8%. This growth seems to continue into the following year with rates arriving at double digit 46.8% compared to today’s earnings, and finally hitting UK£51.4m by 2021.
While it is helpful to be aware of the rate of growth year by year relative to today’s value, it may be more valuable determining the rate at which the earnings are rising or falling on average every year. The pro of this approach is that we can get a better picture of the direction of boohoo 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 12.1%. This means that, we can assume boohoo group will grow its earnings by 12.1% every year for the next few years.
Next Steps:
For boohoo group, I’ve compiled three pertinent 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 BOO 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 BOO 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 BOO? 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.