Yahoo Finance Will Insurance Australia Group Limited’s (ASX:IAG) Earnings Grow In The Years Ahead?
Insurance Australia Group Limited’s (ASX:IAG) most recent earnings update in June 2018 indicated that the company experienced a slight tailwind, leading to a single-digit earnings growth of 0.96%. Below is a brief commentary on my key takeaways on how market analysts predict Insurance Australia Group’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Check out our latest analysis for Insurance Australia Group
Market analysts’ prospects for the coming year seems rather muted, with earnings growing by a single digit 8.25%. The following year doesn’t look much more exciting, though earnings does reach AU$1.01b in 2021.
Even though it’s helpful to understand the growth year by year relative to today’s figure, it may be more valuable evaluating the rate at which the company is growing every year, on average. The advantage of this technique is that it ignores near term flucuations and accounts for the overarching direction of Insurance Australia Group’s earnings trajectory over time, fluctuate up and down. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 1.69%. This means that, we can presume Insurance Australia Group will grow its earnings by 1.69% every year for the next few years.
Next Steps:
For Insurance Australia Group, there are three pertinent 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 IAG 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 IAG is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of IAG? 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.
