The latest earnings update Davide Campari-Milano S.p.A. (BIT:CPR) released in March 2019 confirmed that the business experienced a major headwind with earnings declining by -17%. Investors may find it useful to understand how market analysts predict Davide Campari-Milano's earnings growth outlook over the next couple of years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Market analysts' consensus outlook for the coming year seems pessimistic, with earnings declining by -0.4%. But in the following year, there is a complete contrast in performance, with reaching double digit 7.2% compared to today’s level and continues to increase to €355m in 2022.
Although it’s helpful to be aware of the growth each year relative to today’s value, it may be more beneficial analyzing the rate at which the earnings are moving on average every year. The pro of this approach is that we can get a better picture of the direction of Davide Campari-Milano's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute 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 7.2%. This means, we can assume Davide Campari-Milano will grow its earnings by 7.2% every year for the next few years.
For Davide Campari-Milano, there are three essential 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 CPR 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 CPR is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CPR? 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.
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