Elis SA’s (EPA:ELIS) latest earnings update in December 2018 signalled that the business benefited from a large tailwind, leading to a high double-digit earnings growth of 98%. Below, I’ve laid out key numbers on how market analysts predict Elis’s earnings growth outlook over the next couple of 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.
Check out our latest analysis for Elis
Analysts’ outlook for this coming year seems optimistic, with earnings increasing by a significant 96%. This strong growth in earnings is expected to continue, bringing the bottom line up to €241m by 2022.
Although it is helpful to understand the rate of growth each year relative to today’s figure, it may be more insightful to evaluate the rate at which the earnings are rising or falling on average every year. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Elis’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 26%. This means, we can expect Elis will grow its earnings by 26% every year for the next few years.
Next Steps:
For Elis, I’ve compiled three key aspects you should further examine:
- 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.
- Valuation: What is ELIS 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 ELIS is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ELIS? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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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.