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Will HeidelbergCement AG’s (FRA:HEI) Earnings Grow In The Year Ahead?

Simply Wall St

In September 2018, HeidelbergCement AG (FRA:HEI) released its earnings update. Generally, analyst forecasts appear to be in-line with its track record, as upcoming earnings growth is expected to be 11% next year, similar to the range of average earnings growth for the past five years of 11% per year. Presently, with latest-twelve-month earnings at €969m, we should see this growing to €1.1b by 2020. Below is a brief commentary on the longer term outlook the market has for HeidelbergCement. For those interested in more of an analysis of the company, you can research its fundamentals here.

See our latest analysis for HeidelbergCement

Exciting times ahead?

The view from 23 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of HEI’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.

DB:HEI Past and Future Earnings, March 11th 2019

This results in an annual growth rate of 11% based on the most recent earnings level of €969m to the final forecast of €1.4b by 2022. This leads to an EPS of €8.25 in the final year of projections relative to the current EPS of €4.88. In 2022, HEI’s profit margin will have expanded from 5.6% to 6.8%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For HeidelbergCement, I’ve put together three relevant aspects you should further examine:

  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 HeidelbergCement 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 HeidelbergCement is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of HeidelbergCement? 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.