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The latest earnings update Carlsberg A/S (CPH:CARL B) released in December 2018 confirmed that the company gained from a major tailwind, more than doubling its earnings from the prior year. Investors may find it useful to understand how market analysts view Carlsberg's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts' outlook for the upcoming year seems rather muted, with earnings increasing by a single digit 9.0%. The growth outlook in the following year seems much more positive with rates arriving at double digit 16% compared to today’s earnings, and finally hitting ø6.6b by 2022.
Although it’s useful to understand the growth each year relative to today’s value, it may be more valuable estimating the rate at which the company is growing every year, on average. The benefit of this technique is that we can get a better picture of the direction of Carlsberg'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 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 7.5%. This means that, we can anticipate Carlsberg will grow its earnings by 7.5% every year for the next couple of years.
For Carlsberg, I've put together three fundamental aspects you should further research:
- 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 CARL B 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 CARL B is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CARL B? 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 firstname.lastname@example.org. 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.