Looking at FRoSTA Aktiengesellschaft’s (FRA:NLM) earnings update in December 2018, analyst consensus outlook appear cautiously optimistic, with profits predicted to increase by 16% next year compared with the past 5-year average growth rate of 11%. With trailing-twelve-month net income at current levels of €20m, we should see this rise to €23m in 2020. Below is a brief commentary on the longer term outlook the market has for FRoSTA. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
What can we expect from FRoSTA in the longer term?
The view from 2 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. 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 NLM’s earnings growth over these next few years.
By 2022, NLM’s earnings should reach €32m, from current levels of €20m, resulting in an annual growth rate of 16%. This leads to an EPS of €4.71 in the final year of projections relative to the current EPS of €2.93. With a current profit margin of 3.9%, this movement will result in a margin of 5.5% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For FRoSTA, I’ve compiled 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 FRoSTA 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 FRoSTA is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of FRoSTA? 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.