In September 2018, Melexis NV (EBR:MELE) announced its earnings update. Overall, analyst forecasts seem fairly subdued, with earnings expected to grow by 5.8% in the upcoming year relative to the higher past 5-year average growth rate of 12%. By 2020, we can expect Melexis’s bottom line to reach €117m, a jump from the current trailing-twelve-month of €111m. Below is a brief commentary on the longer term outlook the market has for Melexis. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
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Can we expect Melexis to keep growing?
The longer term view from the 8 analysts covering MELE is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of MELE’s earnings growth over these next few years.
By 2022, MELE’s earnings should reach €160m, from current levels of €111m, resulting in an annual growth rate of 12%. This leads to an EPS of €4.04 in the final year of projections relative to the current EPS of €2.75. With a current profit margin of 22%, this movement will result in a margin of 24% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Melexis, there are three key aspects 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 Melexis 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 Melexis is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Melexis? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.