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On 31 December 2018, SIPEF NV (EBR:SIP) announced its earnings update. Overall, analyst forecasts seem fairly subdued, as a -31% rise in profits is expected in the upcoming year, relative to the higher past 5-year average growth rate of 13%. Currently with trailing-twelve-month earnings of US$30m, we can expect this to reach US$21m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for SIPEF in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Check out our latest analysis for SIPEF
Exciting times ahead?
The longer term expectations from the 2 analysts of SIP is tilted towards the 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 reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 31% based on the most recent earnings level of US$30m to the final forecast of US$56m by 2022. EPS reaches $5.4 in the final year of forecast compared to the current $2.88 EPS today. Margins are currently sitting at 11%, which is expected to expand to 15% by 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For SIPEF, I've compiled three key aspects 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 SIPEF 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 SIPEF 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 SIPEF? 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.