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In March 2019, DNB ASA (OB:DNB) released its earnings update. Generally, analysts seem cautiously bearish, with earnings expected to grow by 0.2% in the upcoming year against the higher past 5-year average growth rate of 1.5%. Presently, with latest-twelve-month earnings at øre24b, we should see this growing to øre24b by 2020. 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. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Can we expect DNB to keep growing?
The longer term view from the 15 analysts covering DNB is one of negative sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. 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.
By 2022, DNB’s earnings should reach øre23b, from current levels of øre24b, resulting in an annual growth rate of -1.1%. However, if we exclude extraordinary items from earnings, we see that the profits is predicted to rise over time, resulting in an EPS of NOK16.93 in the final year of forecast compared to the current NOK14.69 EPS today. Earnings decline appears to be a result of top-line expansion of 3.4%, which is predicted to lag cost growth leading up to 2022. Furthermore, the current 46% margin is expected to contract to 42% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For DNB, there are three important factors you should further research:
- 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 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.
- 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 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.