Ansaldo STS SpA (BIT:STS): Immense Growth Potential?

Looking at Ansaldo STS SpA’s (BIT:STS) earnings update in March 2018, analysts seem fairly confident, as a 28.04% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of 6.26%. Currently with trailing-twelve-month earnings of €66.51m, we can expect this to reach €85.16m by 2019. Below is a brief commentary on the longer term outlook the market has for Ansaldo STS. For those interested in more of an analysis of the company, you can research its fundamentals here.

See our latest analysis for Ansaldo STS

Can we expect Ansaldo STS to keep growing?

Over the next three years, it seems the consensus view of the 3 analysts covering STS is skewed towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. 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.
BIT:STS Future Profit July 31st 18
BIT:STS Future Profit July 31st 18
From the current net income level of €64.98m and the final forecast of €106.20m by 2021, the annual rate of growth for STS’s earnings is 13.43%. EPS reaches €0.52 in the final year of forecast compared to the current €0.32 EPS today. Growth in the bottom line seems to suggest cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. Margins is currently sitting at 4.77%, which is expected to expand to 6.98% by 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Ansaldo STS, I’ve compiled three relevant factors you should further examine:

  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 Ansaldo STS 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 Ansaldo STS is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Ansaldo STS? 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 editorial-team@simplywallst.com.