What Should We Expect From CIE Automotive SA’s (BME:CIE) Earnings In The Next 12 Months?

Looking at CIE Automotive SA’s (BME:CIE) earnings update in March 2018, analysts seem extremely confident, with profits predicted to ramp up by an impressive 65.59% next year, relative to the past 5-year average growth rate of 20.79%. With trailing-twelve-month net income at current levels of €226.69m, we should see this rise to €375.38m in 2019. Below is a brief commentary around CIE Automotive’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

View our latest analysis for CIE Automotive

How will CIE Automotive perform in the near future?

The 8 analysts covering CIE view its longer term outlook with a negative 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 CIE’s earnings growth over these next few years.
BME:CIE Future Profit July 25th 18
BME:CIE Future Profit July 25th 18
From the current net income level of €215.49m and the final forecast of €300.42m by 2021, the annual rate of growth for CIE’s earnings is -6.89%. However, if we exclude extraordinary items from earnings, we see that the profits is predicted to rise over time, resulting in an EPS of €2.46 in the final year of forecast compared to the current €1.67 EPS today. The primary reason for earnings contraction is due to top-line expansion of 4.28%, which is predicted to lag cost growth leading up to 2021. But by the end of 2021, analysts are expecting slower cost growth, resulting in a margin expansion, from the recent 5.79% to 8.44%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For CIE Automotive, there are three relevant factors you should further research:

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