Deutsche Telekom AG (FRA:DTE): What Are The Future Prospects?

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In December 2018, Deutsche Telekom AG (FRA:DTE) released its earnings update. Generally, analysts seem highly optimistic, as a 98% rise in profits is expected in the upcoming year, against the historical 5-year average growth rate of 5.3%. Presently, with latest-twelve-month earnings at €2.2b, we should see this growing to €4.3b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Deutsche Telekom in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

Check out our latest analysis for Deutsche Telekom

Exciting times ahead?

The longer term view from the 15 analysts covering DTE 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. 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.

DB:DTE Past and Future Earnings, April 30th 2019
DB:DTE Past and Future Earnings, April 30th 2019

From the current net income level of €2.2b and the final forecast of €5.3b by 2022, the annual rate of growth for DTE’s earnings is 22%. This leads to an EPS of €1.1 in the final year of projections relative to the current EPS of €0.46. In 2022, DTE’s profit margin will have expanded from 2.8% to 6.3%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Deutsche Telekom, I’ve put together three key factors you should further examine:

  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 Deutsche Telekom 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 Deutsche Telekom is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Deutsche Telekom? 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 editorial-team@simplywallst.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.