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Aktia Bank Plc (HEL:AKTIA): Poised For Long Term Success?

Simply Wall St

On 31 March 2019, Aktia Bank Plc (HEL:AKTIA) announced its earnings update. Overall, it seems that analyst forecasts are fairly optimistic, with profits predicted to increase by 6.1% next year against the past 5-year average growth rate of -2.2%. Currently with trailing-twelve-month earnings of €56m, we can expect this to reach €59m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

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See our latest analysis for Aktia Bank

How will Aktia Bank perform in the near future?

The longer term expectations from the 2 analysts of AKTIA is tilted towards the negative sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for AKTIA, 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.

HLSE:AKTIA Past and Future Earnings, May 25th 2019

By 2022, AKTIA's earnings should reach €55m, from current levels of €56m, resulting in an annual growth rate of -2.0%. This leads to an EPS of €0.78 in the final year of projections relative to the current EPS of €0.81. Contraction in the bottom line seems to suggest cost outpacing top line growth of 2.7% over the next few years. With this high cost growth, margins is expected to contract from 32% to 27% by the end of 2022.

Next Steps:

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