What Do Analysts Think About Red Eléctrica Corporación SA’s (BME:REE) Future?
After Red Eléctrica Corporación SA’s (BME:REE) earnings announcement in June 2018, analyst forecasts appear to be in-line with historical trends, with earnings growth rate expected to be 3.9% in the upcoming year, relative to the past five-year average earnings growth of 3.9% per year. Currently with trailing-twelve-month earnings of €686.7m, we can expect this to reach €713.7m by 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
See our latest analysis for Red Eléctrica Corporación
What can we expect from Red Eléctrica Corporación in the longer term?
Longer term expectations from the 17 analysts covering REE’s stock is one of negative sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for REE, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
By 2021, REE’s earnings should reach €654.8m, from current levels of €669.8m, resulting in an annual growth rate of -2.0%. However, if we exclude extraordinary items from earnings, we see that the profits is predicted to rise over time, resulting in an EPS of €1.25 in the final year of forecast compared to the current €1.24 EPS today. Fall in earnings appears to be a result of cost outpacing top line growth of 0.2% over the next few years. With this high cost growth, margins is expected to contract from 33.4% to 33.2% by the end of 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Red Eléctrica Corporación, I’ve put together three pertinent 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 Red Eléctrica Corporación 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 Red Eléctrica Corporación is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Red Eléctrica Corporación? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
