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The latest earnings announcement Reno De Medici S.p.A. (BIT:RM) released in December 2018 showed that the company gained from a strong tailwind, leading to a high double-digit earnings growth of 87%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive Reno De Medici’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts’ expectations for the coming year seems optimistic, with earnings expanding by a robust 16%. This growth seems to continue into the following year with rates arriving at double digit 23% compared to today’s earnings, and finally hitting €36m by 2022.
Although it’s useful to be aware of the growth rate year by year relative to today’s level, it may be more valuable determining the rate at which the business is moving every year, on average. The benefit of this approach is that we can get a better picture of the direction of Reno De Medici’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put 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 9.0%. This means, we can assume Reno De Medici will grow its earnings by 9.0% every year for the next few years.
For Reno De Medici, I’ve compiled three relevant aspects you should further research:
- 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 RM 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 RM is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of RM? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.