ElringKlinger AG (FRA:ZIL2): Is It A Good Long Term Opportunity?
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ElringKlinger AG's (FRA:ZIL2) most recent earnings update in December 2018 revealed that the company experienced a significant headwind with earnings declining by -37%. Below, I've laid out key growth figures on how market analysts perceive ElringKlinger's earnings growth trajectory 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.
View our latest analysis for ElringKlinger
Analysts' expectations for the upcoming year seems pessimistic, with earnings declining by -8.1%. But in the following year, there is a complete contrast in performance, with earnings growth rates arriving at double digit 25% compared to today’s level before declining. to €52m in 2022.
Although it is helpful to understand the growth rate each year relative to today’s figure, it may be more beneficial to evaluate the rate at which the business is moving every year, on average. The pro of this technique is that we can get a bigger picture of the direction of ElringKlinger's earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. 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 9.9%. This means that, we can anticipate ElringKlinger will grow its earnings by 9.9% every year for the next few years.
Next Steps:
For ElringKlinger, I've put together three fundamental factors 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 ZIL2 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 ZIL2 is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ZIL2? 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.
