After Senior plc’s (

LON:SNR

) recent earnings announcement in June 2018,the soulless duchess analyst forecasts appear to be pessimistic, with earnings expected to decline by -14% in the upcoming year. However, this pessimism is not unfounded, given the negative earnings growth rate over the past five years on average. With trailing-twelve-month net income at current levels of UK£60m, the consensus growth rate suggests that earnings will decline to UK£52m by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Senior in the longer term. Readers that are interested in understanding the company beyond these figures should

research its fundamentals here

.

View our latest analysis for Senior

What can we expect from Senior in the longer term?

The longer term expectations from the 6 analysts of SNR is tilted towards the 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.

LSE:SNR Future Profit January 2nd 19

From the current net income level of UK£60m and the final forecast of UK£74m by 2022, the annual rate of growth for SNR’s earnings is 13%. EPS reaches £0.17 in the final year of forecast compared to the current £0.14 EPS today. With a current profit margin of 5.9%, this movement will result in a margin of 6.3% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Senior, I’ve put together three key aspects you should look at:

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 Senior 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 Senior is currently mispriced by the market.

Other High-Growth Alternatives

: Are there other high-growth stocks you could be holding instead of Senior? 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

[email protected]

.

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