In June 2018, Fraport AG (ETR:FRA) announced its earnings update. Overall, analyst consensus outlook appear cautiously optimistic, with earnings expected to grow by 29% in the upcoming year against the past 5-year average growth rate of 13%. Currently with trailing-twelve-month earnings of €337m, we can expect this to reach €433m by 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Can we expect Fraport to keep growing?
The longer term view from the 17 analysts covering FRA is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. 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.
By 2021, FRA’s earnings should reach €462m, from current levels of €330m, resulting in an annual growth rate of 4.5%. This leads to an EPS of €5.06 in the final year of projections relative to the current EPS of €3.57. The main reason for growth is a result of reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. With a current profit margin of 11%, this movement will result in a margin of 14% by 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Fraport, I’ve put together three fundamental 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 Fraport 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 Fraport is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Fraport? 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 firstname.lastname@example.org.