Yahoo Finance Freedom Insurance Group Limited (ASX:FIG): Are Analysts’ Earnings Forecast Signalling Trouble Ahead?
In June 2018, Freedom Insurance Group Limited (ASX:FIG) released its most recent earnings announcement, which revealed that the business faced a minor headwind with earnings deteriorating from AU$14m to AU$13m, a change of -6.5%. Below is a brief commentary on my key takeaways on how market analysts view Freedom Insurance Group’s earnings growth outlook over the next couple of 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.
Check out our latest analysis for Freedom Insurance Group
Market analysts’ consensus outlook for the upcoming year seems pessimistic, with earnings reducing by a double-digit -24%. Over the medium term, earnings are predicted to continue to be below today’s level, with a decline of -13% in 2021, eventually reaching AU$11m in 2022.
Although it is useful to understand the growth rate each year relative to today’s value, it may be more valuable analyzing the rate at which the earnings are growing every year, on average. The advantage of this method is that we can get a better picture of the direction of Freedom Insurance Group’s earnings trajectory over the long run, irrespective of near term fluctuations, 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 -1.5%. This means that, we can anticipate Freedom Insurance Group will chip away at a rate of -1.5% every year for the next couple of years.
Next Steps:
For Freedom Insurance Group, I’ve put together three relevant aspects you should further research:
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 FIG 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 FIG is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of FIG? 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.
