Yahoo Finance What Are Analysts Saying About The Future Of Woolworths Group Limited’s (ASX:WOW)?
Woolworths Group Limited’s (ASX:WOW) latest earnings announcement in June 2018 suggested that the company benefited from a robust tailwind, eventuating to a double-digit earnings growth of 13%. Below, I’ve presented key growth figures on how market analysts perceive Woolworths Group’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
View our latest analysis for Woolworths Group
Market analysts’ prospects for the upcoming year seems optimistic, with earnings rising by a robust 19%. This growth seems to continue into the following year with rates reaching double digit 24% compared to today’s earnings, and finally hitting AU$2.1b by 2021.
While it’s useful to be aware of the rate of growth year by year relative to today’s value, it may be more beneficial to estimate the rate at which the business is growing every year, on average. The benefit of this approach is that we can get a better picture of the direction of Woolworths 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’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 6.6%. This means, we can presume Woolworths Group will grow its earnings by 6.6% every year for the next couple of years.
Next Steps:
For Woolworths Group, I’ve put together three relevant factors you should further examine:
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.
Valuation: What is WOW 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 WOW is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of WOW? 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.