Yahoo Finance Computershare Limited (ASX:CPU): Poised For Long Term Success?
After Computershare Limited’s (ASX:CPU) earnings announcement in June 2018, analysts seem cautiously optimistic, as a 14.8% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of 5.2%. With trailing-twelve-month net income at current levels of US$300.1m, we should see this rise to US$344.4m in 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
See our latest analysis for Computershare
What can we expect from Computershare in the longer term?
The 12 analysts covering CPU view its longer term outlook with a 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 reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2021, CPU’s earnings should reach US$405.3m, from current levels of US$300.1m, resulting in an annual growth rate of 8.7%. EPS reaches $0.77 in the final year of forecast compared to the current $0.55 EPS today. Growth in earnings appears to be a result of cost cutting activities, as revenues is expected to grow much slower than earnings. In 2021, CPU’s profit margin will have expanded from 13.1% to 16.0%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Computershare, I’ve compiled three key aspects 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 Computershare 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 Computershare is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Computershare? 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.
