Based on Clas Ohlson AB (publ)’s (STO:CLAS B) earnings update in October 2018, it seems that analyst forecasts are fairly bearish, as a -2.5% fall in profits is expected in the upcoming year. However, this pessimism is not unsubstantiated given the negative past 5-year average earnings growth of -2.5%. With trailing-twelve-month net income at current levels of kr358m, the consensus growth rate suggests that earnings will decline to kr349m by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Clas Ohlson in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
See our latest analysis for Clas Ohlson
How will Clas Ohlson perform in the near future?
Over the next three years, it seems the consensus view of the 3 analysts covering CLAS B is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of CLAS B’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 21% based on the most recent earnings level of kr358m to the final forecast of kr527m by 2022. EPS reaches SEK6.68 in the final year of forecast compared to the current SEK5.66 EPS today. With a current profit margin of 4.4%, this movement will result in a margin of 5.8% by 2022.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Clas Ohlson, I’ve put together three pertinent factors you should further research:
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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.
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Valuation: What is Clas Ohlson 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 Clas Ohlson is currently mispriced by the market.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Clas Ohlson? 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 editorial-team@simplywallst.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.