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Bobst Group SA’s (VTX:BOBNN) most recent earnings update in February 2019 indicated that the company faced a major headwind with earnings declining by -44%. Below is my commentary, albeit very simple and high-level, on how market analysts view Bobst Group’s earnings growth outlook over the next couple of years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts’ expectations for next year seems positive, with earnings rising by a robust 42%. This growth seems to continue into the following year with rates reaching double digit 62% compared to today’s earnings, and finally hitting CHF113m by 2022.
Even though it is informative understanding the growth each year relative to today’s value, it may be more insightful gauging the rate at which the earnings are moving on average every year. The pro of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Bobst Group’s earnings trajectory over time, 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 17%. This means, we can assume Bobst Group will grow its earnings by 17% every year for the next few years.
For Bobst Group, there are three pertinent 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 BOBNN 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 BOBNN is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BOBNN? 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.