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Looking at Grifols, S.A.'s (BME:GRF) earnings update in December 2018, the consensus outlook from analysts appear fairly confident, with profits predicted to increase by 16% next year compared with the past 5-year average growth rate of 11%. Presently, with latest-twelve-month earnings at €597m, we should see this growing to €693m by 2020. Below is a brief commentary on the longer term outlook the market has for Grifols. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Exciting times ahead?
The 18 analysts covering GRF view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of GRF's earnings growth over these next few years.
This results in an annual growth rate of 12% based on the most recent earnings level of €597m to the final forecast of €871m by 2022. EPS reaches €1.27 in the final year of forecast compared to the current €0.87 EPS today. With a current profit margin of 13%, this movement will result in a margin of 16% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Grifols, there are three fundamental aspects 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 Grifols 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 Grifols is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Grifols? 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 firstname.lastname@example.org. 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.