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FLSmidth & Co. A/S's (CPH:FLS) latest earnings announcement in December 2018 showed that the company experienced a strong tailwind, eventuating to a high double-digit earnings growth of 95%. Below, I've laid out key growth figures on how market analysts view FLSmidth'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.
Analysts' expectations for this coming year seems optimistic, with earnings rising by a robust 28%. This growth seems to continue into the following year with rates arriving at double digit 52% compared to today’s earnings, and finally hitting ø1.4b by 2022.
While it’s useful to be aware of the growth rate year by year relative to today’s level, it may be more insightful gauging the rate at which the earnings are rising or falling on average every year. The advantage of this approach is that it ignores near term flucuations and accounts for the overarching direction of FLSmidth's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put 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 16%. This means that, we can expect FLSmidth will grow its earnings by 16% every year for the next few years.
For FLSmidth, I've put together three fundamental 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 FLS 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 FLS is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of FLS? 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 email@example.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.