FRoSTA Aktiengesellschaft’s (FRA:NLM) announced its latest earnings update in December 2018, which confirmed that the business faced a immense headwind with earnings falling by -14%. Below is a brief commentary on my key takeaways on how market analysts perceive FRoSTA’s earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts’ expectations for this coming year seems buoyant, with earnings climbing by a robust 16%. This growth seems to continue into the following year with rates reaching double digit 36% compared to today’s earnings, and finally hitting €32m by 2022.
While it is useful to understand the rate of growth each year relative to today’s value, it may be more valuable evaluating the rate at which the business is moving every year, on average. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of FRoSTA’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 16%. This means, we can anticipate FRoSTA will grow its earnings by 16% every year for the next few years.
For FRoSTA, I’ve compiled three fundamental aspects you should further examine:
- 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 NLM 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 NLM is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of NLM? 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.