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Ferro Corporation (NYSE:FOE): Is It A Smart Long Term Opportunity?

Simply Wall St

In December 2018, Ferro Corporation (NYSE:FOE) announced its earnings update. Overall, it seems that analyst forecasts are substantially optimistic, with earnings expected to grow by a high double-digit of 54% in the upcoming year, against the historical 5-year average growth rate of 5.0%. By 2020, we can expect Ferro’s bottom line to reach US$124m, a jump from the current trailing-twelve-month of US$80m. Below is a brief commentary around Ferro's earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

View our latest analysis for Ferro

Exciting times ahead?

The longer term expectations from the 7 analysts of FOE is tilted towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of FOE's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:FOE Past and Future Earnings, April 15th 2019

From the current net income level of US$80m and the final forecast of US$165m by 2022, the annual rate of growth for FOE’s earnings is 17%. EPS reaches $2.2 in the final year of forecast compared to the current $0.95 EPS today. Margins are currently sitting at 5.0%, which is expected to expand to 9.3% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Ferro, there are three fundamental 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 Ferro 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 Ferro is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Ferro? 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.