Yahoo Finance Rightmove plc (LON:RMV): Will The Growth Last?
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The most recent earnings release Rightmove plc's (LON:RMV) announced in December 2018 indicated that the business gained from a strong tailwind, leading to a double-digit earnings growth of 11%. Today I want to provide a brief commentary on how market analysts view Rightmove's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. 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 Rightmove
Analysts' expectations for next year seems rather subdued, with earnings expanding by a single digit 8.3%. The growth outlook in the following year seems much more positive with rates generating double digit 18% compared to today’s earnings, and finally hitting UK£203m by 2022.
Although it is useful to be aware of the rate of growth each year relative to today’s level, it may be more insightful to analyze the rate at which the earnings are moving on average every year. The advantage of this technique is that it ignores near term flucuations and accounts for the overarching direction of Rightmove's earnings trajectory over time, which may be more relevant for long term investors. To calculate 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 7.8%. This means, we can presume Rightmove will grow its earnings by 7.8% every year for the next few years.
Next Steps:
For Rightmove, I've put together three essential 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 RMV 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 RMV is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of RMV? 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.
