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After Recticel SA/NV’s (EBR:REC) earnings announcement in December 2018, analyst consensus outlook appear cautiously optimistic, with earnings expected to grow by 34% in the upcoming year, though this is evidently lower than the historical 5-year average earnings growth of 69%. By 2020, we can expect Recticel’s bottom line to reach €39m, a jump from the current trailing-twelve-month of €29m. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Recticel in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Exciting times ahead?
The 3 analysts covering REC view its longer term outlook with a 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 REC, 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.
This results in an annual growth rate of 13% based on the most recent earnings level of €29m to the final forecast of €50m by 2022. This leads to an EPS of €0.90 in the final year of projections relative to the current EPS of €0.53. Margins are currently sitting at 2.6%, which is expected to expand to 4.4% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Recticel, I’ve put together three key aspects 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 Recticel 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 Recticel is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Recticel? 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.