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After Sophos Group plc’s (LON:SOPH) recent earnings announcement in March 2019, it seems that analyst forecasts are fairly bearish, with earnings expected to decline by 3.3% in the upcoming year against the past 5-year average growth rate of 32%. Presently, with latest-twelve-month earnings at US$27m, we should see this fall to US$26m by 2020. Below is a brief commentary on the longer term outlook the market has for Sophos Group. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Exciting times ahead?
The 10 analysts covering SOPH 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 US$27m and the final forecast of US$56m by 2022, the annual rate of growth for SOPH’s earnings is 26%. This leads to an EPS of $0.10 in the final year of projections relative to the current EPS of $0.056. With a current profit margin of 3.8%, this movement will result in a margin of 6.3% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Sophos Group, I’ve put together three relevant 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 Sophos Group 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 Sophos Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Sophos Group? 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 email@example.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.