Based on Neste Oyj’s (HEL:NESTE) earnings update in June 2018, the consensus outlook from analysts appear somewhat bearish, with earnings expected to grow by 8.8% in the upcoming year against the higher past 5-year average growth rate of 28%. Currently with trailing-twelve-month earnings of €992m, we can expect this to reach €1.1b by 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect Neste Oyj to keep growing?
The longer term view from the 17 analysts covering NESTE 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 understand the overall trajectory of NESTE’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
By 2021, NESTE’s earnings should reach €1.3b, from current levels of €911m, resulting in an annual growth rate of 11%. EPS reaches €5.38 in the final year of forecast compared to the current €3.56 EPS today. Growth in earnings appears to be a result of cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. With a current profit margin of 8.4%, this movement will result in a margin of 9.6% by 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Neste Oyj, there are three key 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 Neste Oyj 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 Neste Oyj is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Neste Oyj? 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 email@example.com.