Atresmedia Corporación de Medios de Comunicación SA (BME:A3M): What We Can Expect From This Growth Stock

Based on Atresmedia Corporación de Medios de Comunicación SA’s (BME:A3M) earnings update in September 2018, analysts seem cautiously bearish, as a 6.7% rise in profits is expected in the upcoming year, relative to the higher past 5-year average growth rate of 22%. Presently, with latest-twelve-month earnings at €142m, we should see this growing to €152m by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Atresmedia Corporación de Medios de Comunicación in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for Atresmedia Corporación de Medios de Comunicación

How will Atresmedia Corporación de Medios de Comunicación perform in the near future?

The 17 analysts covering A3M view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. 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 A3M’s earnings growth over these next few years.

BME:A3M Future Profit December 3rd 18
BME:A3M Future Profit December 3rd 18

From the current net income level of €142m and the final forecast of €149m by 2021, the annual rate of growth for A3M’s earnings is 0.5%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of €0.59 in the final year of forecast compared to the current €0.63 EPS today. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 14% to 14% by the end of 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Atresmedia Corporación de Medios de Comunicación, there are three key 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 Atresmedia Corporación de Medios de Comunicación 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 Atresmedia Corporación de Medios de Comunicación is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Atresmedia Corporación de Medios de Comunicación? 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 editorial-team@simplywallst.com.