In This Article:
In September 2018, Ceconomy AG (FRA:CEC) announced its latest earnings update, which confirmed that the business endured a significant headwind with earnings falling by -35%. Below, I’ve laid out key numbers on how market analysts perceive Ceconomy’s earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
See our latest analysis for Ceconomy
Analysts’ outlook for next year seems positive, with earnings increasing by a significant 99%. This strong growth in earnings is expected to continue, bringing the bottom line up to €219m by 2022.
Even though it’s useful to understand the rate of growth year by year relative to today’s figure, it may be more beneficial analyzing the rate at which the earnings are moving on average every year. The benefit of this method is that we can get a bigger picture of the direction of Ceconomy’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted 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 26%. This means that, we can presume Ceconomy will grow its earnings by 26% every year for the next few years.
Next Steps:
For Ceconomy, I’ve compiled three relevant 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 CEC 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 CEC 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 CEC? 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.