Since Evonik Industries AG (FRA:EVK) released its earnings in March 2019, analyst forecasts seem pessimistic, with profits predicted to drop by 11% next year against the past 5-year average growth rate of 7.4%. With trailing-twelve-month net income at current levels of €930m, the consensus growth rate suggests that earnings will decline to €830m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Evonik Industries in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How is Evonik Industries going to perform in the near future?
Over the next three years, it seems the consensus view of the 18 analysts covering EVK is skewed towards the 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 reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of €930m and the final forecast of €958m by 2022, the annual rate of growth for EVK’s earnings is 5.2%. This leads to an EPS of €2.05 in the final year of projections relative to the current EPS of €2. In 2022, EVK's profit margin will have expanded from 6.2% to 6.5%.
Future outlook is only one aspect when you're building an investment case for a stock. For Evonik Industries, I've compiled three pertinent aspects 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 Evonik Industries 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 Evonik Industries is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Evonik Industries? 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.