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What Should Investors Know About Baby Bunting Group Limited's (ASX:BBN) Growth?

Simply Wall St

Looking at Baby Bunting Group Limited's (ASX:BBN) earnings update on 30 June 2019, analysts seem cautiously optimistic, with earnings expected to grow by 22% in the upcoming year relative to the past 5-year average growth rate of 15%. With trailing-twelve-month net income at current levels of AU$12m, we should see this rise to AU$15m in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

View our latest analysis for Baby Bunting Group

How is Baby Bunting Group going to perform in the near future?

Longer term expectations from the 4 analysts covering BBN’s stock is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of BBN'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.

ASX:BBN Past and Future Earnings, August 17th 2019

From the current net income level of AU$12m and the final forecast of AU$27m by 2022, the annual rate of growth for BBN’s earnings is 25%. This leads to an EPS of A$0.21 in the final year of projections relative to the current EPS of A$0.098. In 2022, BBN's profit margin will have expanded from 3.4% to 5.3%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Baby Bunting Group, I've compiled three essential aspects you should further research:

  1. 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.
  2. Valuation: What is Baby Bunting 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 Baby Bunting Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Baby Bunting 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!

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 editorial-team@simplywallst.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.