G5 Entertainment AB (publ)’s (STO:G5EN) most recent earnings update in December 2018 suggested that the company experienced a strong tailwind, eventuating to a double-digit earnings growth of 44%. Below, I’ve presented key growth figures on how market analysts view G5 Entertainment’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts’ expectations for next year seems pessimistic, with earnings falling by -4.3%. But in the following year, there is a complete contrast in performance, with generating double digit 12% compared to today’s level and continues to increase to kr186m in 2022.
While it’s helpful to understand the growth each year relative to today’s figure, it may be more beneficial estimating the rate at which the earnings are rising or falling every year, on average. The pro of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of G5 Entertainment’s earnings trajectory over time, which may be more relevant for long term investors. To compute 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 13%. This means, we can expect G5 Entertainment will grow its earnings by 13% every year for the next few years.
For G5 Entertainment, I’ve compiled three essential 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 G5EN 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 G5EN is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of G5EN? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.