Based on G5 Entertainment AB (publ)’s (STO:G5EN) earnings update in December 2018, analyst consensus outlook appear bearish, with profits predicted to drop by -4.3% next year compared with the past 5-year average growth rate of 66%. Presently, with latest-twelve-month earnings at kr129m, we should see this fall to kr123m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect G5 Entertainment to keep growing?
The longer term expectations from the 3 analysts of G5EN is tilted towards the 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 get an idea of the overall earnings growth trend for G5EN, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 13% based on the most recent earnings level of kr129m to the final forecast of kr186m by 2022. EPS reaches SEK20.73 in the final year of forecast compared to the current SEK14.45 EPS today. In 2022, G5EN’s profit margin will have expanded from 8.9% to 11%.
Future outlook is only one aspect when you’re building an investment case for a stock. For G5 Entertainment, there are three essential 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 G5 Entertainment 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 G5 Entertainment is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of G5 Entertainment? 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 email@example.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.