Yahoo Finance Will Insurance Australia Group Limited’s (ASX:IAG) Earnings Grow In The Next 12 Months?
Looking at Insurance Australia Group Limited’s (ASX:IAG) earnings update in June 2018, analysts seem fairly confident, as a 6.80% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of 5.73%. With trailing-twelve-month net income at current levels of AU$947.00m, we should see this rise to AU$1.01b in 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
See our latest analysis for Insurance Australia Group
Can we expect Insurance Australia Group to keep growing?
The longer term expectations from the 10 analysts of IAG is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of IAG’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
By 2021, IAG’s earnings should reach AU$991.62m, from current levels of AU$947.00m, resulting in an annual growth rate of 1.24%. This leads to an EPS of A$0.42 in the final year of projections relative to the current EPS of A$0.40. The main reason for growth is a result of cost cutting activities, as revenues is expected to grow much slower than earnings. In 2021, IAG’s profit margin will have expanded from 11.72% to 12.69%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Insurance Australia Group, I’ve compiled three essential factors 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 Insurance Australia Group 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 Insurance Australia Group is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Insurance Australia Group? 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.
