In June 2017, Veris Limited (ASX:VRS) announced its latest earnings update, which signalled that the business faced a significant headwind with earnings declining by -99.76%. Below is a brief commentary on my key takeaways on how market analysts perceive Veris’s earnings growth trajectory over the next few 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. Check out our latest analysis for Veris
Market analysts’ consensus outlook for next year seems optimistic, with earnings growth more than doubling. Earnings continue to grow strongly in the next couple of years, finally reaching A$6.0M in 2020.
Even though it is useful to understand the growth each year relative to today’s figure, it may be more insightful determining the rate at which the earnings are moving every year, on average. The pro of this approach is that it ignores near term flucuations and accounts for the overarching direction of Veris’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 63.42%. This means, we can anticipate Veris will grow its earnings by 63.42% every year for the next few years.
Next Steps:
For Veris, I’ve compiled three relevant 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 VRS 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 VRS is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of VRS? 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.