DNB ASA (OB:DNB): Is It A Smart Long Term Opportunity?

Based on DNB ASA’s (OB:DNB) earnings update on 31 December 2018, it seems that analyst forecasts are fairly optimistic, with earnings expected to grow by 6.1% in the upcoming year relative to the past 5-year average growth rate of 1.4%. By 2020, we can expect DNB’s bottom line to reach øre25b, a jump from the current trailing-twelve-month of øre24b. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for DNB in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.

Check out our latest analysis for DNB

Can we expect DNB to keep growing?

The longer term view from the 18 analysts covering DNB 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 DNB, 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.

OB:DNB Past and Future Earnings, March 8th 2019
OB:DNB Past and Future Earnings, March 8th 2019

By 2022, DNB’s earnings should reach øre25b, from current levels of øre24b, resulting in an annual growth rate of 1.7%. EPS reaches NOK16.79 in the final year of forecast compared to the current NOK14.69 EPS today. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 46% to 44% by the end of 2022.

Next Steps:

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