freenet AG (FRA:FNTN): What Does The Future Look Like?
Looking at freenet AG’s (FRA:FNTN) earnings update in September 2018, the consensus outlook from analysts appear fairly confident, as a 29% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of 2.5%. With trailing-twelve-month net income at current levels of €287m, we should see this rise to €369m in 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for freenet in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
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Can we expect freenet to keep growing?
The longer term view from the 14 analysts covering FNTN is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for FNTN, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of €287m and the final forecast of €435m by 2022, the annual rate of growth for FNTN’s earnings is 7.4%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of €2.14 in the final year of forecast compared to the current €2.24 EPS today. Margins are currently sitting at 8.1%, which is expected to expand to 13% by 2022.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For freenet, I’ve put together 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 freenet 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 freenet is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of freenet? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
