Heineken N.V. (AMS:HEIA): Immense Growth Potential?

After Heineken N.V.’s (AMS:HEIA) earnings announcement in June 2018, analysts seem fairly confident, with earnings expected to grow by 5.4% in the upcoming year against the past 5-year average growth rate of 0.3%. Currently with trailing-twelve-month earnings of €1.9b, we can expect this to reach €2.0b by 2020. Below is a brief commentary around Heineken’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.

View our latest analysis for Heineken

How will Heineken perform in the near future?

The longer term view from the 26 analysts covering HEIA is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for HEIA, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

ENXTAM:HEIA Future Profit January 11th 19
ENXTAM:HEIA Future Profit January 11th 19

This results in an annual growth rate of 9.7% based on the most recent earnings level of €1.9b to the final forecast of €2.5b by 2022. This leads to an EPS of €4.9 in the final year of projections relative to the current EPS of €3.39. In 2022, HEIA’s profit margin will have expanded from 8.8% to 10%.

Next Steps:

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