The latest earnings release Etn. Fr. Colruyt NV's (EBR:COLR) announced in July 2019 showed that the company benefited from a small tailwind, leading to a single-digit earnings growth of 2.5%. Below is a brief commentary on my key takeaways on how market analysts view Etn. Fr. Colruyt's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Market analysts' prospects for next year seems pessimistic, with earnings reducing by -4.2%. Over the medium term, earnings should continue to be below today's level, with a decline of -0.6% in 2021, eventually reaching €380m in 2022.
Even though it is helpful to understand the growth rate year by year relative to today’s value, it may be more valuable gauging the rate at which the earnings are rising or falling every year, on average. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of Etn. Fr. Colruyt's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 0.08%. This means, we can anticipate Etn. Fr. Colruyt will grow its earnings by 0.08% every year for the next couple of years.
For Etn. Fr. Colruyt, there are three relevant aspects you should look at:
- 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 COLR 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 COLR is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of COLR? 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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