The most recent earnings announcement Aventus Group’s (ASX:AVN) released in June 2018 confirmed that the company experienced a substantial headwind with earnings declining by -15%. Today I want to provide a brief commentary on how market analysts view Aventus Group’s earnings growth outlook over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
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Analysts’ expectations for the upcoming year seems pessimistic, with earnings decreasing by a double-digit -26%. In the next couple of years, earnings are expected to continue to be below today’s level, with a decline of -23% in 2021, eventually reaching AU$105m in 2022.
Even though it’s helpful to be aware of the growth each year relative to today’s figure, it may be more insightful evaluating the rate at which the business is moving on average every year. The advantage of this approach is that we can get a bigger picture of the direction of Aventus Group’s earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To compute this rate, I’ve appended 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 -8.0%. This means that, we can assume Aventus Group will chip away at a rate of -8.0% every year for the next few years.
Next Steps:
For Aventus Group, I’ve put together three fundamental factors you should further research:
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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 AVN 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 AVN 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 AVN? 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.