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ASML Holding N.V. (AMS:ASML): Is It A Smart Long Term Opportunity?

Simply Wall St

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In March 2019, ASML Holding N.V. (AMS:ASML) released its earnings update. Generally, analysts seem cautiously optimistic, as a 14% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of 12%. By 2020, we can expect ASML Holding’s bottom line to reach €3.0b, a jump from the current trailing-twelve-month of €2.6b. Below is a brief commentary on the longer term outlook the market has for ASML Holding. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

View our latest analysis for ASML Holding

Can we expect ASML Holding to keep growing?

Longer term expectations from the 32 analysts covering ASML’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 get an idea of the overall earnings growth trend for ASML, 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.

ENXTAM:ASML Past and Future Earnings, July 16th 2019

By 2022, ASML's earnings should reach €4.6b, from current levels of €2.6b, resulting in an annual growth rate of 20%. This leads to an EPS of €10.83 in the final year of projections relative to the current EPS of €6.1. With a current profit margin of 24%, this movement will result in a margin of 32% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For ASML Holding, there are three relevant aspects you should further examine:

  1. 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.
  2. Valuation: What is ASML Holding 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 ASML Holding is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of ASML Holding? 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 editorial-team@simplywallst.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.