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Will Hexagon AB (publ)'s (STO:HEXA B) Earnings Grow In The Year Ahead?

Simply Wall St

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After Hexagon AB (publ)'s (STO:HEXA B) earnings announcement on 31 December 2018, it seems that analyst expectations are fairly bearish, with profits predicted to rise by 10% next year against the higher past 5-year average growth rate of 16%. Presently, with latest-twelve-month earnings at €730m, we should see this growing to €804m by 2020. Below is a brief commentary around Hexagon's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.

See our latest analysis for Hexagon

Exciting times ahead?

The longer term expectations from the 14 analysts of HEXA B 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. 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 HEXA B's earnings growth over these next few years.

OM:HEXA B Past and Future Earnings, April 1st 2019

By 2022, HEXA B's earnings should reach €949m, from current levels of €730m, resulting in an annual growth rate of 8.7%. This leads to an EPS of €2.64 in the final year of projections relative to the current EPS of €2.02. With a current profit margin of 19%, this movement will result in a margin of 21% by 2022.

Next Steps:

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