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Will Deutsche Post AG's (ETR:DPW) Earnings Grow Over The Next Few Years?

Simply Wall St

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Deutsche Post AG's (ETR:DPW) announced its latest earnings update in December 2018, which signalled that the company experienced a major headwind with earnings falling by -24%. Below is my commentary, albeit very simple and high-level, on how market analysts view Deutsche Post's earnings growth outlook over the next few 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.

Check out our latest analysis for Deutsche Post

Analysts' expectations for the coming year seems optimistic, with earnings rising by a robust 33%. This growth seems to continue into the following year with rates reaching double digit 50% compared to today’s earnings, and finally hitting €3.3b by 2022.

XTRA:DPW Past and Future Earnings, May 1st 2019

Although it is helpful to be aware of the growth each year relative to today’s level, it may be more insightful determining the rate at which the business is rising or falling every year, on average. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of Deutsche Post's earnings trajectory over time, which may be more relevant for long term investors. To calculate 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 12%. This means that, we can assume Deutsche Post will grow its earnings by 12% every year for the next couple of years.

Next Steps:

For Deutsche Post, I've compiled three pertinent aspects 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 DPW 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 DPW is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of DPW? 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.