What Are Analysts Saying About Koninklijke Philips NV.’s (AMS:PHIA) Future?
The latest earnings announcement Koninklijke Philips NV.’s (ENXTAM:PHIA) released in December 2017 showed that the company benefited from a slight tailwind, leading to a single-digit earnings growth of 3.30%. Below is my commentary, albeit very simple and high-level, on how market analysts view Koninklijke Philips’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. View our latest analysis for Koninklijke Philips
Analysts’ expectations for this coming year seems buoyant, with earnings increasing by a significant 68.68%. This strong growth in earnings is expected to continue, bringing the bottom line up to €1.90B by 2021.
Although it is helpful to be aware of the growth year by year relative to today’s figure, it may be more beneficial to evaluate the rate at which the business is rising or falling every year, on average. The advantage of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Koninklijke Philips’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 analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 18.58%. This means that, we can presume Koninklijke Philips will grow its earnings by 18.58% every year for the next few years.
Next Steps:
For Koninklijke Philips, I’ve compiled 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 PHIA 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 PHIA is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of PHIA? 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 pass 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.
