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In December 2018, UCB SA (EBR:UCB) released its earnings update. Generally, the consensus outlook from analysts appear pessimistic, with earnings expected to decline by 3.9% in the upcoming year compared with the past 5-year average growth rate of 43%. With trailing-twelve-month net income at current levels of €792m, the consensus growth rate suggests that earnings will decline to €761m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for UCB in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How will UCB perform in the near future?
Longer term expectations from the 13 analysts covering UCB’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. 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 €792m and the final forecast of €941m by 2022, the annual rate of growth for UCB’s earnings is 4.7%. EPS reaches €5.12 in the final year of forecast compared to the current €4.2 EPS today. Margins are currently sitting at 17%, which is expected to expand to 18% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For UCB, I've put together three important 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 UCB 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 UCB is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of UCB? 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.