Singapore Markets closed

Coats Group plc (LON:COA): What Does The Future Look Like?

Sadie Atkinson

The most recent earnings announcement Coats Group plc’s (LON:COA) released in December 2017 suggested that the company benefited from a strong tailwind, leading to a double-digit earnings growth of 26.65%. Below, I’ve laid out key numbers on how market analysts predict Coats Group’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. Check out our latest analysis for Coats Group

Analysts’ outlook for the upcoming year seems pessimistic, with earnings falling by a double-digit -14.77%. However, the next few years seem to illustrate a completely different picture, with expected earnings growth rates generating double digit 13.53% compared to today’s level and continues to increase.

LSE:COA Future Profit June 23rd 18

Although it is helpful to be aware of the rate of growth each year relative to today’s figure, it may be more insightful to analyze the rate at which the business is rising or falling on average every year. The benefit of this method is that it ignores near term flucuations and accounts for the overarching direction of Coats Group’s earnings trajectory over time, which may be more relevant for long term investors. To compute 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 11.15%. This means that, we can anticipate Coats Group will grow its earnings by 11.15% every year for the next few years.

Next Steps:

For Coats Group, I’ve put together three relevant aspects you should further research:

  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 COA 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 COA is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of COA? 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.