Yahoo Finance Aristocrat Leisure Limited (ASX:ALL): Immense Growth Potential?
In March 2018, Aristocrat Leisure Limited (ASX:ALL) announced its earnings update. Overall, analysts seem cautiously optimistic, with profits predicted to increase by 43.5% next year against the past 5-year average growth rate of 32.0%. With trailing-twelve-month net income at current levels of AU$502.0m, we should see this rise to AU$720.3m in 2019. Below is a brief commentary on the longer term outlook the market has for Aristocrat Leisure. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Check out our latest analysis for Aristocrat Leisure
Can we expect Aristocrat Leisure to keep growing?
The view from 13 analysts over the next three years is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of ALL’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
By 2021, ALL’s earnings should reach AU$1.01b, from current levels of AU$495.1m, resulting in an annual growth rate of 17.7%. EPS reaches A$1.6 in the final year of forecast compared to the current A$0.78 EPS today. The main reason for growth is a result of cost cutting activities, as revenues is expected to grow much slower than earnings. With a current profit margin of 20.2%, this movement will result in a margin of 24.1% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Aristocrat Leisure, I’ve put together three relevant aspects you should look at:
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 Aristocrat Leisure 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 Aristocrat Leisure is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Aristocrat Leisure? 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.
