What Should We Expect From Stalprodukt SA’s (WSE:STP) Earnings Over The Next Year?

In June 2018, Stalprodukt SA (WSE:STP) released its earnings update. Generally, analyst forecasts seem fairly subdued, as a 14% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 32%. With trailing-twelve-month net income at current levels of zł254m, we should see this rise to zł290m in 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Stalprodukt in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

Check out our latest analysis for Stalprodukt

Exciting times ahead?

Longer term expectations from the 4 analysts covering STP’s stock is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for STP, 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.

WSE:STP Future Profit November 23rd 18
WSE:STP Future Profit November 23rd 18

This results in an annual growth rate of 2.9% based on the most recent earnings level of zł254m to the final forecast of zł283m by 2021. This leads to an EPS of PLN55.86 in the final year of projections relative to the current EPS of PLN45.6. The main reason for growth is a result of cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. In 2021, STP’s profit margin will have expanded from 7.3% to 7.3%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Stalprodukt, I’ve put together three fundamental aspects you should further research:

  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 Stalprodukt 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 Stalprodukt is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Stalprodukt? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.