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What Do Analysts Think About The Future Of InterContinental Hotels Group PLC's (LON:IHG)?

Simply Wall St

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The most recent earnings update InterContinental Hotels Group PLC's (LON:IHG) released in December 2018 confirmed that the business endured a immense headwind with earnings falling by -35%. Below, I've presented key growth figures on how market analysts predict InterContinental Hotels Group's earnings growth outlook 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.

View our latest analysis for InterContinental Hotels Group

Market analysts' prospects for the coming year seems buoyant, with earnings expanding by a robust 50%. This growth seems to continue into the following year with rates reaching double digit 77% compared to today’s earnings, and finally hitting US$701m by 2022.

LSE:IHG Past and Future Earnings, April 4th 2019

While it is helpful to be aware of the growth rate each year relative to today’s level, it may be more insightful analyzing the rate at which the business is growing on average every year. The pro of this technique is that we can get a bigger picture of the direction of InterContinental Hotels 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 inserted 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 17%. This means, we can presume InterContinental Hotels Group will grow its earnings by 17% every year for the next few years.

Next Steps:

For InterContinental Hotels Group, there are three key aspects you should further research:

  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 IHG 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 IHG is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of IHG? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.