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Based on Lonza Group Ltd’s (VTX:LONN) earnings update in December 2018, analyst consensus outlook appear cautiously optimistic, as a 26% increase in profits is expected in the upcoming year, though this is relatively lower than the previous 5-year average earnings growth of 36%. Currently with trailing-twelve-month earnings of CHF655m, we can expect this to reach CHF828m by 2020. Below is a brief commentary on the longer term outlook the market has for Lonza Group. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How is Lonza Group going to perform in the near future?
The longer term expectations from the 13 analysts of LONN is tilted towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2022, LONN’s earnings should reach CHF1.1b, from current levels of CHF655m, resulting in an annual growth rate of 14%. EPS reaches CHF14.13 in the final year of forecast compared to the current CHF8.8 EPS today. Margins are currently sitting at 12%, which is expected to expand to 16% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Lonza Group, I’ve put together three key 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 Lonza Group 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 Lonza Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Lonza Group? 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 firstname.lastname@example.org. 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.