Since Stalprodukt S.A. (WSE:STP) released its earnings in March 2019, analysts seem cautiously bearish, with profits predicted to rise by 4.6% next year compared with the higher past 5-year average growth rate of 19%. Presently, with latest-twelve-month earnings at zł270m, we should see this growing to zł283m by 2020. Below is a brief commentary on the longer term outlook the market has for Stalprodukt. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Exciting times ahead?
The longer term view from the 3 analysts covering STP is one of negative sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of STP’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.
From the current net income level of zł270m and the final forecast of zł244m by 2022, the annual rate of growth for STP’s earnings is -6.8%. EPS reaches PLN35.75 in the final year of forecast compared to the current PLN48.44 EPS today. The primary reason for earnings contraction is due to cost growth exceeding top-line growth of 1.1% in the next three years. Furthermore, the current 6.8% margin is expected to contract to 5.9% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Stalprodukt, I’ve compiled three essential factors you should further research:
- 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.
- Valuation: What is Stalprodukt 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 Stalprodukt is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Stalprodukt? 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 firstname.lastname@example.org. 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.