Will Totens Sparebank’s (OB:TOTG) Earnings Grow In The Year Ahead?

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On 31 December 2018, Totens Sparebank (OB:TOTG) released its most recent earnings update. Generally, analyst forecasts seem pessimistic, with earnings expected to decline by -15% in the upcoming year against the past 5-year average growth rate of 8.0%. With trailing-twelve-month net income at current levels of øre182m, the consensus growth rate suggests that earnings will decline to øre154m by 2020. Below is a brief commentary on the longer term outlook the market has for Totensrebank. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for Totensrebank

Can we expect Totensrebank to keep growing?

Over the next three years, it seems the consensus view of the 3 analysts covering TOTG is skewed towards the negative sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of TOTG’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

OB:TOTG Future Profit February 20th 19
OB:TOTG Future Profit February 20th 19

By 2022, TOTG’s earnings should reach øre148m, from current levels of øre182m, resulting in an annual growth rate of -5.0%. EPS reaches NOK13.25 in the final year of forecast compared to the current NOK29.68 EPS today. The main reason for TOTG’s earnings contraction is a reduction in the top line of -9.1%, squeezing the bottom line. However, the current margin of 46% is expected to expand to 48% by 2022.

Next Steps:

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