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In December 2018, Alm. Brand A/S (CPH:ALMB) announced its most recent earnings update, which confirmed that the company endured a significant headwind with earnings falling by -30%. Investors may find it useful to understand how market analysts perceive Alm. Brand’s earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts’ outlook for this coming year seems rather subdued, with earnings expanding by a single digit 8.9%. The growth outlook in the following year seems much more positive with rates arriving at double digit 15% compared to today’s earnings, and finally hitting ø691m by 2022.
Although it’s informative understanding the rate of growth each year relative to today’s level, it may be more valuable to evaluate the rate at which the business is growing every year, on average. The benefit of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Alm. Brand’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 6.4%. This means, we can assume Alm. Brand will grow its earnings by 6.4% every year for the next couple of years.
For Alm. Brand, I’ve compiled three essential aspects you should look at:
- 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 ALMB 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 ALMB is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ALMB? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.