In March 2019, Continental Aktiengesellschaft (FRA:CON) released its earnings update. Generally, the consensus outlook from analysts appear bearish, with earnings expected to decline by 17% in the upcoming year relative to the past 5-year average growth rate of 6.1%. Currently with a trailing-twelve-month profit of €2.9b, the consensus growth rate suggests that earnings will drop to €2.4b by 2020. Below is a brief commentary on the longer term outlook the market has for Continental. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How is Continental going to perform in the near future?
The longer term expectations from the 23 analysts of CON 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, CON’s earnings should reach €3.2b, from current levels of €2.9b, resulting in an annual growth rate of 12%. EPS reaches €15.35 in the final year of forecast compared to the current €14.49 EPS today. Margins are currently sitting at 6.5%, approximately the same as previous years. With analysts forecasting revenue growth of 0.10496 and CON’s net income growth expected to roughly track that, this company may add value for shareholders over time.
Future outlook is only one aspect when you’re building an investment case for a stock. For Continental, there are three pertinent 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 Continental 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 Continental is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Continental? 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.