Kesko Oyj (HEL:KESKOB): Will The Growth Last?

After Kesko Oyj’s (HEL:KESKOB) earnings announcement on 31 December 2018, it seems that analyst forecasts are fairly optimistic, as a 22% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of 15%. With trailing-twelve-month net income at current levels of €216m, we should see this rise to €263m in 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Kesko Oyj in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.

View our latest analysis for Kesko Oyj

Exciting times ahead?

Longer term expectations from the 6 analysts covering KESKOB’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for KESKOB, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

HLSE:KESKOB Past and Future Earnings, March 20th 2019
HLSE:KESKOB Past and Future Earnings, March 20th 2019

From the current net income level of €216m and the final forecast of €314m by 2022, the annual rate of growth for KESKOB’s earnings is 8.8%. EPS reaches €3.16 in the final year of forecast compared to the current €2.18 EPS today. Margins are currently sitting at 2.1%, which is expected to expand to 2.8% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Kesko Oyj, there are three essential 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 Kesko Oyj 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 Kesko Oyj is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Kesko Oyj? 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.