Alumetal S.A.’s (WSE:AML) released its most recent earnings update in December 2018, which showed that the business benefited from a slight tailwind, eventuating to a single-digit earnings growth of 5.2%. Below is a brief commentary on my key takeaways on how market analysts view Alumetal’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts’ prospects for next year seems positive, with earnings rising by a robust 10%. However, the following year seems to show a contrast, with earnings reducing by -1.9%. This volatility continues into the final year of forecast, with earnings reaching zł76m.
While it is helpful to be aware of the growth rate each year relative to today’s value, it may be more insightful to analyze the rate at which the business is rising or falling on average every year. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of Alumetal’s earnings trajectory over time, be more volatile. To calculate 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 -0.1%. This means, we can assume Alumetal will chip away at a rate of -0.1% every year for the next couple of years.
For Alumetal, I’ve compiled three pertinent 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 AML 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 AML is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of AML? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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