On 31 December 2018, MLP SE (FRA:MLP) released its most recent earnings update. Generally, analyst consensus outlook seem pessimistic, with profits predicted to drop by -6.1% next year against the past 5-year average growth rate of 2.5%. With trailing-twelve-month net income at current levels of €35m, the consensus growth rate suggests that earnings will decline to €32m by 2020. Below is a brief commentary around MLP’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.
Can we expect MLP to keep growing?
The view from 4 analysts over the next three years is one of negative sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for MLP, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of -1.1% based on the most recent earnings level of €35m to the final forecast of €34m by 2022. This leads to an EPS of €0.29 in the final year of projections relative to the current EPS of €0.32. The bottom-line decline seems to be caused by cost growth exceeding top-line growth of 2.7% in the next three years. With this high cost growth, margins is expected to contract from 5.4% to 4.8% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For MLP, I’ve put together three relevant factors 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 MLP 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 MLP is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of MLP? 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.