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Prada S.p.A.'s (HKG:1913) latest earnings announcement in December 2018 confirmed that the company endured a immense headwind with earnings deteriorating by -14%. Below, I've presented key growth figures on how market analysts predict Prada'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.
Analysts' outlook for the coming year seems buoyant, with earnings expanding by a robust 39%. This growth seems to continue into the following year with rates reaching double digit 41% compared to today’s earnings, and finally hitting €323m by 2022.
Even though it is helpful to understand the growth rate year by year relative to today’s level, it may be more insightful to gauge the rate at which the earnings are rising or falling on average every year. The pro of this technique is that we can get a bigger picture of the direction of Prada's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate 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 13%. This means, we can anticipate Prada will grow its earnings by 13% every year for the next couple of years.
For Prada, I've compiled three key 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 1913 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 1913 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1913? 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 email@example.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.