Vista Group International Limited (NZSE:VGL): Is It A Good Long Term Opportunity?

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The most recent earnings update Vista Group International Limited's (NZSE:VGL) released in December 2018 revealed that the company benefited from a strong tailwind, eventuating to a double-digit earnings growth of 27%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Vista Group International's earnings growth outlook over the next few 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 Vista Group International

Analysts' expectations for the upcoming year seems positive, with earnings growing by a significant 72%. This strong growth in earnings is expected to continue, bringing the bottom line up to NZ$34m by 2022.

NZSE:VGL Past and Future Earnings, March 27th 2019

While it is helpful to be aware of the growth rate each year relative to today’s value, it may be more insightful estimating the rate at which the company is growing every year, on average. The benefit of this approach is that we can get a better picture of the direction of Vista Group International's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I've inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 22%. This means, we can expect Vista Group International will grow its earnings by 22% every year for the next couple of years.

Next Steps:

For Vista Group International, I've compiled three important factors you should look at:

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 VGL 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 VGL is currently mispriced by the market.

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