Gestamp Automoción, S.A. (BME:GEST): Poised For Long-Term Success?

In December 2018, Gestamp Automoción, S.A. (BME:GEST) announced its latest earnings update, which showed that the business gained from a slight tailwind, leading to a single-digit earnings growth of 7.5%. Below, I’ve laid out key growth figures on how market analysts view Gestamp Automoción’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. 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.

View our latest analysis for Gestamp Automoción

Analysts’ expectations for next year seems buoyant, with earnings expanding by a robust 22%. This growth seems to continue into the following year with rates arriving at double digit 39% compared to today’s earnings, and finally hitting €397m by 2022.

BME:GEST Past and Future Earnings, April 19th 2019
BME:GEST Past and Future Earnings, April 19th 2019

Although it’s helpful to be aware of the rate of growth year by year relative to today’s figure, it may be more valuable to analyze the rate at which the earnings are growing on average every year. The advantage of this approach is that it ignores near term flucuations and accounts for the overarching direction of Gestamp Automoción’s earnings trajectory over time, which may be more relevant for long term investors. To calculate 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 9.7%. This means that, we can assume Gestamp Automoción will grow its earnings by 9.7% every year for the next couple of years.

Next Steps:

For Gestamp Automoción, I’ve compiled three pertinent aspects you should look at:

  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 GEST 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 GEST is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of GEST? 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.