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How Do Analysts See Vestas Wind Systems A/S (CPH:VWS) Performing In The Years Ahead?

Simply Wall St

Vestas Wind Systems A/S's (CPH:VWS) announced its latest earnings update in December 2018, which signalled that the company endured a significant headwind with earnings falling by -23%. Below is a brief commentary on my key takeaways on how market analysts perceive Vestas Wind Systems's earnings growth outlook over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

See our latest analysis for Vestas Wind Systems

Analysts' expectations for the coming year seems positive, with earnings increasing by a robust 16%. This growth seems to continue into the following year with rates reaching double digit 33% compared to today’s earnings, and finally hitting €893m by 2022.

CPSE:VWS Past and Future Earnings, April 22nd 2019

Even though it’s helpful to understand the rate of growth year by year relative to today’s figure, it may be more beneficial to analyze the rate at which the company is growing every year, on average. The pro of this approach is that we can get a better picture of the direction of Vestas Wind Systems's earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To calculate this rate, I've appended 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 8.9%. This means, we can anticipate Vestas Wind Systems will grow its earnings by 8.9% every year for the next couple of years.

Next Steps:

For Vestas Wind Systems, I've put together three essential aspects you should further examine:

  1. 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.
  2. Valuation: What is VWS 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 VWS is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of VWS? 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 editorial-team@simplywallst.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.