Yahoo Finance Will Mainfreight Limited’s (NZE:MFT) Earnings Grow In The Next 12 Months?
After Mainfreight Limited’s (NZSE:MFT) earnings announcement in March 2018, analysts seem cautiously optimistic, as a 18.25% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of 9.45%. Currently with earnings of NZ$107.89M, we can expect this to reach NZ$127.58M by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Mainfreight in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here. Check out our latest analysis for Mainfreight
Exciting times ahead?
The 6 analysts covering MFT view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around 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.
From the current net income level of NZ$107.89M and the final forecast of NZ$155.95M by 2021, the annual rate of growth for MFT’s earnings is 11.93%. This leads to an EPS of NZ$1.56 in the final year of projections relative to the current EPS of NZ$1.07. The primary reason for earnings growth is due to reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. With a current profit margin of 4.12%, this movement will result in a margin of 4.59% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Mainfreight, there are three pertinent aspects you should further examine:
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 Mainfreight 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 Mainfreight is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Mainfreight? 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 pass 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.
