Yahoo Finance Harvey Norman Holdings Limited (ASX:HVN): Is It A Good Long Term Opportunity?
The most recent earnings announcement Harvey Norman Holdings Limited’s (ASX:HVN) released in June 2018 confirmed that the company experienced a significant headwind with earnings deteriorating by -16.4%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Harvey Norman Holdings’s earnings growth outlook over the next couple of years and whether the future looks brighter. 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 Harvey Norman Holdings
Market analysts’ consensus outlook for the upcoming year seems pessimistic, with earnings falling by -1.7%. Over the medium term, earnings should continue to be below today’s level, with a reduction of -2.1% in 2020, eventually reaching AU$367.4m in 2021.
While it is useful to be aware of the growth rate each year relative to today’s level, it may be more beneficial to analyze the rate at which the business is moving on average every year. The benefit of this approach is that we can get a bigger picture of the direction of Harvey Norman Holdings’s earnings trajectory over the long run, irrespective of near term fluctuations, fluctuate up and down. To calculate this rate, I’ve appended 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 0.1%. This means that, we can anticipate Harvey Norman Holdings will grow its earnings by 0.1% every year for the next few years.
Next Steps:
For Harvey Norman Holdings, I’ve put together three fundamental aspects 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 HVN 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 HVN is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of HVN? 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.
