What Should Investors Know About Clariant AG’s (VTX:CLN) Long Term Outlook?
Clariant AG’s (SWX:CLN) most recent earnings update in December 2017 indicated that the business gained from a slight tailwind, eventuating to a single-digit earnings growth of 9.49%. Below is my commentary, albeit very simple and high-level, on how market analysts view Clariant’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings. See our latest analysis for Clariant
Market analysts’ consensus outlook for the coming year seems buoyant, with earnings rising by a robust 47.09%. This growth seems to continue into the following year with rates arriving at double digit 68.62% compared to today’s earnings, and finally hitting CHF519.15M by 2021.
While it’s useful to understand the rate of growth year by year relative to today’s level, it may be more valuable to estimate the rate at which the earnings are moving on average every year. The benefit of this technique is that we can get a bigger picture of the direction of Clariant’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 14.63%. This means that, we can anticipate Clariant will grow its earnings by 14.63% every year for the next couple of years.
Next Steps:
For Clariant, I’ve put together three essential factors you should further examine:
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 CLN 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 CLN is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CLN? 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 pass 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.
