Polytec Holding AG (VIE:PYT): Are Analysts Right About The Drop In Earnings?

On 31 December 2018, Polytec Holding AG (VIE:PYT) announced its latest earnings update. Overall, analyst consensus outlook seem pessimistic, with profits predicted to drop by -7.3% next year relative to the past 5-year average growth rate of 21%. Currently with a trailing-twelve-month profit of €29m, the consensus growth rate suggests that earnings will drop to €27m by 2020. Below is a brief commentary around Polytec Holding’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.

See our latest analysis for Polytec Holding

What can we expect from Polytec Holding in the longer term?

Over the next three years, it seems the consensus view of the 3 analysts covering PYT is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for PYT, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

WBAG:PYT Past and Future Earnings, April 2nd 2019
WBAG:PYT Past and Future Earnings, April 2nd 2019

This results in an annual growth rate of 4.9% based on the most recent earnings level of €29m to the final forecast of €35m by 2022. This leads to an EPS of €1.6 in the final year of projections relative to the current EPS of €1.32. With a current profit margin of 4.5%, this movement will result in a margin of 5.2% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Polytec Holding, I’ve put together three relevant factors you should further research:

  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 Polytec Holding 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 Polytec Holding is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Polytec Holding? 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.