The most recent earnings release Polytec Holding AG’s (VIE:PYT) announced in December 2018 revealed that the business endured a major headwind with earnings falling by -24%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Polytec Holding’s earnings growth trajectory over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts’ consensus outlook for next year seems pessimistic, with earnings declining by -4.2%. But in the following year, there is a complete contrast in performance, with reaching double digit 4.9% compared to today’s level and continues to increase to €33m in 2022.
While it is informative understanding the growth year by year relative to today’s level, it may be more beneficial to estimate the rate at which the earnings are growing on average every year. The advantage of this method is that we can get a better picture of the direction of Polytec Holding’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve appended 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 4.8%. This means, we can presume Polytec Holding will grow its earnings by 4.8% every year for the next few years.
For Polytec Holding, I’ve compiled three essential aspects you should look at:
- 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 PYT 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 PYT is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of PYT? 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 email@example.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.