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ASM International NV’s (AMS:ASM) released its most recent earnings update in December 2018, which revealed that the business faced a major headwind with earnings declining by -65%. Below, I’ve presented key growth figures on how market analysts view ASM International’s earnings growth outlook over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts’ prospects for the upcoming year seems positive, with earnings expanding by a robust 10%. This growth seems to continue into the following year with rates arriving at double digit 24% compared to today’s earnings, and finally hitting €229m by 2022.
While it is useful to understand the growth year by year relative to today’s value, it may be more insightful to determine the rate at which the company is growing every year, on average. The benefit of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of ASM International’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve inserted 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 12%. This means, we can presume ASM International will grow its earnings by 12% every year for the next couple of years.
For ASM International, there are three essential 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 ASM 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 ASM is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ASM? 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.