How Do Analysts See Rapala VMC Corporation (HEL:RAP1V) Performing Over The Next Few Years?

Rapala VMC Corporation’s (HEL:RAP1V) released its most recent earnings update in December 2018, which suggested that the business experienced a major tailwind, more than doubling its earnings from the prior year. Investors may find it useful to understand how market analysts view Rapala VMC’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

See our latest analysis for Rapala VMC

Market analysts’ consensus outlook for the coming year seems buoyant, with earnings expanding by a significant 86%. This strong growth in earnings is expected to continue, bringing the bottom line up to €16m by 2022.

HLSE:RAP1V Past and Future Earnings, May 22nd 2019
HLSE:RAP1V Past and Future Earnings, May 22nd 2019

While it is useful to understand the growth rate each year relative to today’s figure, it may be more valuable to estimate the rate at which the earnings are rising or falling every year, on average. The pro of this method is that it ignores near term flucuations and accounts for the overarching direction of Rapala VMC’s earnings trajectory over time, which may be more relevant for long term investors. To compute 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 23%. This means, we can assume Rapala VMC will grow its earnings by 23% every year for the next few years.

Next Steps:

For Rapala VMC, 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 RAP1V 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 RAP1V is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of RAP1V? 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.