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Acerinox, S.A. (BME:ACX): Should The Future Outlook Worry You?

Bruce Howe

Since Acerinox, S.A. (BME:ACX) released its earnings in September 2018, it seems that analyst forecasts are fairly bearish, with earnings expected to decline by -14% in the upcoming year compared with the past 5-year average growth rate of 35%. Presently, with latest-twelve-month earnings at €234m, we should see this fall to €202m by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Acerinox in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

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How will Acerinox perform in the near future?

The longer term expectations from the 15 analysts of ACX is tilted towards the positive 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.

BME:ACX Future Profit January 17th 19

From the current net income level of €234m and the final forecast of €210m by 2022, the annual rate of growth for ACX’s earnings is 4.3%. EPS reaches €0.97 in the final year of forecast compared to the current €0.85 EPS today. However, the expansion of the current 5.0% margin is not expected to be sustained, as it begins to contract to 4.3% by the end of 2022.

Next Steps:

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