As Electricité de France S.A. (EPA:EDF) released its earnings announcement on 30 June 2019, analysts seem extremely confident, with earnings expected to grow by a high double-digit of 61% in the upcoming year, relative to the past 5-year average growth rate of -13%. With trailing-twelve-month net income at current levels of €593m, we should see this rise to €957m in 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Electricité de France in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How will Electricité de France perform in the near future?
Over the next three years, it seems the consensus view of the 16 analysts covering EDF is skewed 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 understand the overall trajectory of EDF’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 €593m and the final forecast of €1.3b by 2022, the annual rate of growth for EDF’s earnings is 14%. EPS reaches €1.07 in the final year of forecast compared to the current €0.20 EPS today. With a current profit margin of 0.9%, this movement will result in a margin of 1.7% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Electricité de France, I’ve put together three essential factors you should further examine:
- 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 Electricité de France 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 Electricité de France is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Electricité de France? 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.