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AST Groupe (EPA:ASP): Poised For Long-Term Success?

Simply Wall St

The latest earnings update AST Groupe (EPA:ASP) released in May 2019 revealed that the company experienced a slight headwind with earnings declining from €8.9m to €8.0m, a change of -9.5%. Below, I've laid out key numbers on how market analysts perceive AST Groupe's earnings growth trajectory over the next couple of 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.

See our latest analysis for AST Groupe

Analysts' expectations for next year seems pessimistic, with earnings falling by a double-digit -41%. In the next couple of years, earnings should continue to be below today's level, with a decline of -22% in 2021, eventually reaching €6.3m in 2022.

ENXTPA:ASP Past and Future Earnings, July 27th 2019

Although it is informative understanding the growth each year relative to today’s level, it may be more valuable to estimate the rate at which the company is rising or falling on average every year. The benefit of this method is that it ignores near term flucuations and accounts for the overarching direction of AST Groupe's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put 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 3.1%. This means that, we can presume AST Groupe will grow its earnings by 3.1% every year for the next few years.

Next Steps:

For AST Groupe, I've put together three important factors you should look at:

  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 ASP 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 ASP is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ASP? 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.