Will Sixt SE’s (FRA:SIX2) Earnings Grow In The Year Ahead?

Based on Sixt SE’s (FRA:SIX2) earnings update in March 2019, analyst consensus outlook seem bearish, with profits predicted to drop by 2.8% next year relative to the past 5-year average growth rate of 32%. With trailing-twelve-month net income at current levels of €426m, the consensus growth rate suggests that earnings will decline to €414m by 2020. Below is a brief commentary on the longer term outlook the market has for Sixt. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

View our latest analysis for Sixt

How is Sixt going to perform in the near future?

The longer term expectations from the 8 analysts of SIX2 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 understand the overall trajectory of SIX2’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.

DB:SIX2 Past and Future Earnings, August 13th 2019
DB:SIX2 Past and Future Earnings, August 13th 2019

This results in an annual growth rate of 8.7% based on the most recent earnings level of €426m to the final forecast of €509m by 2022. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of €5.97 in the final year of forecast compared to the current €9.08 EPS today. Margins are currently sitting at 15%, which is expected to expand to 17% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Sixt, I’ve put together three pertinent aspects you should look at:

  1. 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.
  2. Valuation: What is Sixt 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 Sixt is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Sixt? 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.