Daimler AG (ETR:DAI): Should The Future Outlook Worry You?

After Daimler AG's (XTRA:DAI) earnings announcement in December 2017, analyst forecasts seem pessimistic, with profits predicted to drop by -4.02% next year against the past 5-year average growth rate of 9.67%. Presently, with earnings at €10.53B, we should see this fall to €10.10B by 2019. Below is a brief commentary on the longer term outlook the market has for Daimler. For those keen to understand more about other aspects of the company, you can research its fundamentals here. Check out our latest analysis for Daimler

What can we expect from Daimler in the longer term?

The 28 analysts covering DAI view its longer term outlook with a negative sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly 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 DAI's earnings growth over these next few years.

This results in an annual growth rate of -0.59% based on the most recent earnings level of €10.53B to the final forecast of €10.34B by 2021. This leads to an EPS of €9.48 in the final year of projections relative to the current EPS of €9.84. Earnings decline appears to be a result of cost growth exceeding top-line growth of 2.75% in the next three years. With this high cost growth, margins is expected to contract from 6.40% to 5.78% by the end of 2021.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Daimler, there are three key aspects you should look at:

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 Daimler 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 Daimler is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Daimler? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.