Yahoo Finance What Should You Know About The Future Of Downer EDI Limited’s (ASX:DOW)?
On 31 December 2018, Downer EDI Limited (ASX:DOW) announced its earnings update. Overall, it seems that analyst forecasts are fairly optimistic, with profits predicted to increase by 46% next year against the past 5-year average growth rate of -12%. Currently with trailing-twelve-month earnings of AU$63m, we can expect this to reach AU$93m by 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.
See our latest analysis for Downer EDI
Exciting times ahead?
The longer term expectations from the 8 analysts of DOW is tilted towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of DOW’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 2022, DOW’s earnings should reach AU$91m, from current levels of AU$63m, resulting in an annual growth rate of 2.3%. EPS reaches A$0.51 in the final year of forecast compared to the current A$0.11 EPS today. Analysts are predicting earnings growth to outpace revenue by the end of 2022, resulting in a margin expansion from 0.5% to 0.7%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Downer EDI, I’ve compiled three relevant factors 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 Downer EDI 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 Downer EDI is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Downer EDI? 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.
