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ESI Group SA's (EPA:ESI) most recent earnings update in January 2019 revealed that the business benefited from a strong tailwind, eventuating to a double-digit earnings growth of 40%. Below is a brief commentary on my key takeaways on how market analysts predict ESI Group'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 ESI Group
Market analysts' prospects for the upcoming year seems buoyant, with earnings rising by a robust 29%. This growth seems to continue into the following year with rates arriving at double digit 66% compared to today’s earnings, and finally hitting €5.6m by 2022.
While it is informative knowing the growth each year relative to today’s figure, it may be more valuable to gauge the rate at which the company is rising or falling every year, on average. The pro of this approach is that we can get a better picture of the direction of ESI Group'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 put 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 18%. This means that, we can assume ESI Group will grow its earnings by 18% every year for the next couple of years.
Next Steps:
For ESI Group, I've compiled three key 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 ESI 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 ESI 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 ESI? 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.