In December 2018, Nokian Renkaat Oyj (HEL:NRE1V) released its latest earnings announcement, which indicated that the business gained from a strong tailwind, eventuating to a double-digit earnings growth of 33%. Today I want to provide a brief commentary on how market analysts perceive Nokian Renkaat Oyj's earnings growth outlook 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.
Market analysts' prospects for the coming year seems pessimistic, with earnings reducing by -1.4%. But in the following year, there is a complete contrast in performance, with reaching double digit 3.1% compared to today’s level and continues to increase to €326m in 2022.
Although it’s informative understanding the rate of growth year by year relative to today’s figure, it may be more beneficial to evaluate the rate at which the earnings are moving every year, on average. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of Nokian Renkaat Oyj'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 3.2%. This means, we can presume Nokian Renkaat Oyj will grow its earnings by 3.2% every year for the next few years.
For Nokian Renkaat Oyj, I've compiled three pertinent 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 NRE1V 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 NRE1V is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of NRE1V? 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.