Yahoo Finance OFX Group Limited (ASX:OFX): Poised For Long-Term Success?
The most recent earnings update OFX Group Limited’s (ASX:OFX) released in March 2018 suggested that the company faced a slight headwind with earnings falling from AU$20m to AU$19m, a change of -4.6%. Investors may find it useful to understand how market analysts perceive OFX Group’s earnings growth outlook over the next few years and whether the future looks brighter. 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 OFX Group
Market analysts’ consensus outlook for next year seems positive, with earnings expanding by a robust 22%. This growth seems to continue into the following year with rates reaching double digit 35% compared to today’s earnings, and finally hitting AU$26m by 2021.
Although it’s helpful to understand the growth rate each year relative to today’s value, it may be more beneficial gauging the rate at which the company is growing on average every year. The advantage of this technique is that we can get a bigger picture of the direction of OFX Group’s earnings trajectory over the long run, irrespective of near term fluctuations, 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 12%. This means that, we can assume OFX Group will grow its earnings by 12% every year for the next few years.
Next Steps:
For OFX Group, I’ve put together three important 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 OFX 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 OFX is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of OFX? 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.
