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Enel SpA (BIT:ENEL): Poised For Long-Term Success?

Simply Wall St

In December 2018, Enel SpA (BIT:ENEL) released its most recent earnings announcement, which indicated that the company benefited from a robust tailwind, leading to a double-digit earnings growth of 27%. Below, I've laid out key growth figures on how market analysts perceive Enel's earnings growth outlook 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.

See our latest analysis for Enel

Analysts' outlook for next year seems pessimistic, with earnings reducing by -0.9%. But in the following year, there is a complete contrast in performance, with arriving at double digit 8.2% compared to today’s level and continues to increase to €5.4b in 2022.

BIT:ENEL Past and Future Earnings, April 16th 2019

While it’s informative knowing the growth rate year by year relative to today’s value, it may be more insightful to evaluate the rate at which the company is growing on average every year. The advantage of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Enel's earnings trajectory over time, 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 3.5%. This means, we can expect Enel will grow its earnings by 3.5% every year for the next few years.

Next Steps:

For Enel, I've put together three fundamental aspects you should further research:

  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 ENEL 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 ENEL is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ENEL? 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.