The a2 Milk Company Limited: Poised for Long Term Success?

In December 2018, The a2 Milk Company Limited (NZSE:ATM) released its earnings update. Generally, the consensus outlook from analysts appear fairly confident, as a 30% increase in profits is expected in the upcoming year, though this is evidently lower than the previous 5-year average earnings growth of 71%. With trailing-twelve-month net income at current levels of NZ$196m, we should see this rise to NZ$255m in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

How is a2 Milk going to perform in the near future?

Longer term expectations from the 13 analysts covering ATM’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for ATM, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

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