Based on Skandinaviska Enskilda Banken AB (publ.)’s (STO:SEB A) recently announced earnings update on 31 December 2018, analyst consensus outlook appear pessimistic, with earnings expected to decline by -20% in the upcoming year against the past 5-year average growth rate of 3.6%. Currently with a trailing-twelve-month profit of kr23b, the consensus growth rate suggests that earnings will drop to kr19b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Skandinaviska Enskilda Banken AB (publ.) in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
How is Skandinaviska Enskilda Banken AB (publ.) going to perform in the near future?
The longer term view from the 17 analysts covering SEB A is one of negative sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2022, SEB A’s earnings should reach kr21b, from current levels of kr23b, resulting in an annual growth rate of -3.0%. This leads to an EPS of SEK9.48 in the final year of projections relative to the current EPS of SEK10.69. Fall in earnings appears to be a result of cost outpacing top line growth of 4.1% over the next few years. With this high cost growth, margins is expected to contract from 52% to 40% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Skandinaviska Enskilda Banken AB (publ.), I’ve compiled three key factors you should look at:
- 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 Skandinaviska Enskilda Banken AB (publ.) 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 Skandinaviska Enskilda Banken AB (publ.) is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Skandinaviska Enskilda Banken AB (publ.)? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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