In This Article:
The latest earnings announcement Wavestone SA (EPA:WAVE) released in March 2018 suggested that the business benefited from a robust tailwind, leading to a double-digit earnings growth of 32.8%. Today I want to provide a brief commentary on how market analysts view Wavestone’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
See our latest analysis for Wavestone
Market analysts’ prospects for next year seems optimistic, with earnings expanding by a robust 16.2%. This growth seems to continue into the following year with rates reaching double digit 41.5% compared to today’s earnings, and finally hitting €44.7m by 2021.
Although it’s informative understanding the growth each year relative to today’s level, it may be more insightful to estimate the rate at which the earnings are 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 Wavestone’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 16.8%. This means, we can expect Wavestone will grow its earnings by 16.8% every year for the next couple of years.
Next Steps:
For Wavestone, there are three important factors you should look at:
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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 WAVE 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 WAVE 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 WAVE? 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.