On 31 March 2019, Koninklijke Philips N.V. (AMS:PHIA) announced its earnings update. Overall, the consensus outlook from analysts appear somewhat bearish, with profits predicted to rise by 15% next year against the higher past 5-year average growth rate of 22%. With trailing-twelve-month net income at current levels of €1.3b, we should see this rise to €1.5b in 2020. Below is a brief commentary on the longer term outlook the market has for Koninklijke Philips. For those interested in more of an analysis of the company, you can research its fundamentals here.
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What can we expect from Koninklijke Philips in the longer term?
The longer term view from the 16 analysts covering PHIA is one of 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 get an idea of the overall earnings growth trend for PHIA, 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.
This results in an annual growth rate of 14% based on the most recent earnings level of €1.3b to the final forecast of €2.0b by 2022. EPS reaches €2.3 in the final year of forecast compared to the current €1.41 EPS today. Margins are currently sitting at 7.2%, which is expected to expand to 9.5% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Koninklijke Philips, there are three essential factors 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 Koninklijke Philips 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 Koninklijke Philips is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Koninklijke Philips? 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 email@example.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.