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The latest earnings release Compagnie Générale des Établissements Michelin's (EPA:ML) announced in December 2018 confirmed that the business endured a slight headwind with earnings falling from €1.7b to €1.7b, a change of -1.4%. Below, I've laid out key growth figures on how market analysts predict Compagnie Générale des Établissements Michelin's earnings growth outlook over the next few years and whether the future looks brighter. 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' expectations for the upcoming year seems positive, with earnings growing by a robust 21%. This growth seems to continue into the following year with rates arriving at double digit 30% compared to today’s earnings, and finally hitting €2.3b by 2022.
Although it is informative understanding the rate of growth each year relative to today’s figure, it may be more valuable analyzing the rate at which the business is rising or falling on average every year. The advantage of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Compagnie Générale des Établissements Michelin'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 10%. This means that, we can assume Compagnie Générale des Établissements Michelin will grow its earnings by 10% every year for the next few years.
For Compagnie Générale des Établissements Michelin, there are three pertinent 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 ML 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 ML is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ML? 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.