New Zealand King Salmon Investments Limited (NZSE:NZK) is expected to deliver an underwhelming negative -14.58% in earnings growth per share over the next three years. With the recent EPS of $0.16, expected contraction will drag down the upcoming EPS to $0.14. A negative earnings growth may indicate change in NZK, whether the company is undergoing an investment period in which expenses grow at a faster rate than revenue, or the industry is facing negative headwinds moving forward. To determine whether this negative growth rate expectation is justified, we should take a look at how the company has been performing in the past. Check out our latest analysis for New Zealand King Salmon Investments
Adverse times ahead
The bad news for investors in NZK is that a drop in earnings is in the horizon. Based on analyst coverage of NZK, there is a predicted earnings slide down to $0.14 in three years’ time from previous levels of around $0.16. This would be a decline of -14.6%, making it an interesting ride. In the same period revenue is expected to grow from $136 Million to $200 Million in 2021 and profits (net income) are predicted to reduce slightly from $22 Million to $21 Million in 2021. Future margins are predicted to be a respectable 10.69%.
Is this similar growth to the past?
The past can be an insightful indicator for future performance for a stock. We can determine whether this level of expected growth is relatively reasonable or whether the negative outlook is too harsh. NZK is expected to face a substantial shift from a previous double-digit growth of 20.19%, over the last five years, to a forecast double-digit decline by analysts. This is highly unencouraging and may be a sign of an investment period for NZK, incurring higher expense growth than revenue.
On the whole, NZK looks like it is expected to exhibit a negative growth trajectory in the upcoming year, exhibited by analysts’ unfavourable growth projections. However, this negative sentiment provides an opportunity for contrarian, long term investors to see if the stock has been overly discounted by the market. If NZK is well-below its intrinsic value, no matter how bad the near term outlook, the stock could return a good investment. Is NZK an undervalued gem? Let’s find out in this free analysis report. If you are not interested in NZK anymore, you can use our free platform to see my list of over 150 other stocks with a high growth potential.
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