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What Should Investors Know About ISS A/S's (CPH:ISS) Growth?

Simply Wall St

On 30 June 2019, ISS A/S (CPH:ISS) released its earnings update. Generally, the consensus outlook from analysts appear fairly confident, with earnings expected to grow by 30% in the upcoming year relative to the past 5-year average growth rate of 7.9%. With trailing-twelve-month net income at current levels of ø1.2b, we should see this rise to ø1.6b in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

See our latest analysis for ISS

How will ISS perform in the near future?

The view from 9 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. 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 ISS's earnings growth over these next few years.

CPSE:ISS Past and Future Earnings, September 1st 2019

This results in an annual growth rate of 13% based on the most recent earnings level of ø1.2b to the final forecast of ø2.0b by 2022. EPS reaches DKK14.4 in the final year of forecast compared to the current DKK6.57 EPS today. Margins are currently sitting at 1.6%, which is expected to expand to 2.5% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For ISS, I've put together three fundamental factors you should look at:

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