In June 2018, Bonduelle SA (EPA:BON) released its latest earnings announcement, which confirmed that the business benefited from a robust tailwind, leading to a double-digit earnings growth of 21%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive Bonduelle’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts’ expectations for this coming year seems rather muted, with earnings increasing by a single digit 7.2%. The growth outlook in the following year seems much more positive with rates generating double digit 21% compared to today’s earnings, and finally hitting €98m by 2021.
Even though it is informative understanding the growth rate each year relative to today’s figure, it may be more insightful estimating the rate at which the company is rising or falling every year, on average. The advantage of this technique is that we can get a better picture of the direction of Bonduelle’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve appended 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 10%. This means that, we can presume Bonduelle will grow its earnings by 10% every year for the next few years.
For Bonduelle, there are three fundamental factors you should further examine:
- 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 BON 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 BON is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BON? 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 email@example.com.