Yahoo Finance What Should You Know About The Future Of ASX Limited’s (ASX:ASX)?
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ASX Limited’s (ASX:ASX) released its most recent earnings update in June 2018, which showed that the business experienced a small tailwind, leading to a single-digit earnings growth of 2.5%. Below, I’ve laid out key numbers on how market analysts predict ASX’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
See our latest analysis for ASX
Market analysts’ consensus outlook for this coming year seems rather muted, with earnings climbing by a single digit 8.7%. The growth outlook in the following year seems much more positive with rates generating double digit 12% compared to today’s earnings, and finally hitting AU$521m by 2022.
Although it is helpful to be aware of the rate of growth each year relative to today’s value, it may be more insightful to gauge the rate at which the earnings are moving every year, on average. The advantage of this technique is that it ignores near term flucuations and accounts for the overarching direction of ASX’s earnings trajectory over time, which may be more relevant for long term investors. To compute 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 4.9%. This means that, we can assume ASX will grow its earnings by 4.9% every year for the next couple of years.
Next Steps:
For ASX, I’ve put together three essential 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 ASX 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 ASX is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ASX? 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.
