Neste Oyj (HEL:NESTE): What Are The Future Prospects?

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Since Neste Oyj (HEL:NESTE) released its earnings in March 2019, analysts seem highly optimistic, as a 90% rise in profits is expected in the upcoming year, relative to the previous 5-year average growth rate of 23%. Currently with trailing-twelve-month earnings of €778m, we can expect this to reach €1.5b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

See our latest analysis for Neste Oyj

Can we expect Neste Oyj to keep growing?

Longer term expectations from the 17 analysts covering NESTE’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 reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

HLSE:NESTE Past and Future Earnings, July 16th 2019
HLSE:NESTE Past and Future Earnings, July 16th 2019

From the current net income level of €778m and the final forecast of €1.6b by 2022, the annual rate of growth for NESTE’s earnings is 8.4%. EPS reaches €1.99 in the final year of forecast compared to the current €1.01 EPS today. In 2022, NESTE’s profit margin will have expanded from 5.8% to 11%.

Next Steps:

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