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How Do Analysts See Compass Group PLC (LON:CPG) Performing Over The Next Year?

In March 2019, Compass Group PLC (LON:CPG) released its earnings update. Generally, analysts seem fairly confident, with earnings expected to grow by 15% in the upcoming year relative to the past 5-year average growth rate of 11%. Presently, with latest-twelve-month earnings at UK£1.1b, we should see this growing to UK£1.3b by 2020. Below is a brief commentary around Compass Group's earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

Check out our latest analysis for Compass Group

How is Compass Group going to perform in the near future?

The longer term expectations from the 19 analysts of CPG is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

LSE:CPG Past and Future Earnings, August 20th 2019
LSE:CPG Past and Future Earnings, August 20th 2019

From the current net income level of UK£1.1b and the final forecast of UK£1.5b by 2022, the annual rate of growth for CPG’s earnings is 7.0%. This leads to an EPS of £0.97 in the final year of projections relative to the current EPS of £0.71. In 2022, CPG's profit margin will have expanded from 4.9% to 5.4%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Compass Group, there are three pertinent aspects you should further research:

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  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 Compass 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 Compass Group is currently mispriced by the market.

  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Compass 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.