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Looking at Poste Italiane SpA’s (BIT:PST) recent earnings update on 31 March 2019, analyst consensus outlook seem pessimistic, as a 20% fall in profits is expected in the upcoming year compared with the past 5-year average growth rate of 15%. With trailing-twelve-month net income at current levels of €1.4b, the consensus growth rate suggests that earnings will decline to €1.1b by 2020. Below is a brief commentary around Poste Italiane’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Exciting times ahead?
The longer term expectations from the 8 analysts of PST is tilted towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. 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.
From the current net income level of €1.4b and the final forecast of €1.3b by 2022, the annual rate of growth for PST’s earnings is 4.3%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of €0.93 in the final year of forecast compared to the current €1.07 EPS today. Margins are currently sitting at 4.7%, which is expected to expand to 12% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Poste Italiane, I’ve put together three relevant factors you should look at:
- 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 Poste Italiane 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 Poste Italiane is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Poste Italiane? 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 firstname.lastname@example.org. 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.