U.S. Markets closed

What Should Investors Know About Nokian Renkaat Oyj’s (HEL:NRE1V) Growth?

Andrew Edmonds

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

Based on Nokian Renkaat Oyj’s (HEL:NRE1V) recently announced earnings update on 31 December 2018, it seems that analyst forecasts are fairly pessimistic, as a -1.3% fall in profits is expected in the upcoming year relative to the past 5-year average growth rate of 7.5%. Currently with a trailing-twelve-month profit of €295m, the consensus growth rate suggests that earnings will drop to €291m by 2020. Below is a brief commentary around Nokian Renkaat Oyj’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

View our latest analysis for Nokian Renkaat Oyj

Exciting times ahead?

The view from 19 analysts over the next three years is one of 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 NRE1V’s earnings growth over these next few years.

HLSE:NRE1V Future Profit February 8th 19

By 2022, NRE1V’s earnings should reach €327m, from current levels of €295m, resulting in an annual growth rate of 3.3%. EPS reaches €2.37 in the final year of forecast compared to the current €2.15 EPS today. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 19% to 17% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Nokian Renkaat Oyj, I’ve put together three essential factors you should further research:

  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 Nokian Renkaat Oyj 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 Nokian Renkaat Oyj is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Nokian Renkaat Oyj? 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.