Koninklijke DSM N.V. (AMS:DSM): Earnings Expected To Remain Subdued

The latest earnings release Koninklijke DSM N.V.’s (AMS:DSM) announced in December 2018 suggested that the company endured a substantial headwind with earnings deteriorating by -39%. Below, I’ve laid out key growth figures on how market analysts predict Koninklijke DSM’s earnings growth outlook over the next few years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

Check out our latest analysis for Koninklijke DSM

Analysts’ expectations for this coming year seems pessimistic, with earnings falling by a double-digit -20%. In the next couple of years, earnings should continue to be below today’s level, with a decline of -13% in 2021, eventually reaching €927m in 2022.

ENXTAM:DSM Past and Future Earnings, March 22nd 2019
ENXTAM:DSM Past and Future Earnings, March 22nd 2019

Although it is informative understanding the growth rate each year relative to today’s level, it may be more insightful to estimate the rate at which the company is growing on average every year. The benefit of this approach is that we can get a bigger picture of the direction of Koninklijke DSM’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve inserted 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 -0.2%. This means that, we can assume Koninklijke DSM will chip away at a rate of -0.2% every year for the next couple of years.

Next Steps:

For Koninklijke DSM, I’ve put together three important aspects 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 DSM 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 DSM is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of DSM? 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 editorial-team@simplywallst.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.