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What Should Investors Know About Stora Enso Oyj's (HEL:STERV) Growth?

Simply Wall St

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Based on Stora Enso Oyj's (HEL:STERV) earnings update in March 2019, analyst forecasts seem bearish, as a 19% fall in profits is expected in the upcoming year relative to the past 5-year average growth rate of 33%. Presently, with latest-twelve-month earnings at €1.0b, we should see this fall to €817m by 2020. Below is a brief commentary on the longer term outlook the market has for Stora Enso Oyj. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

See our latest analysis for Stora Enso Oyj

How will Stora Enso Oyj perform in the near future?

The longer term view from the 15 analysts covering STERV is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for STERV, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

HLSE:STERV Past and Future Earnings, July 18th 2019

This results in an annual growth rate of 0.1% based on the most recent earnings level of €1.0b to the final forecast of €863m by 2022. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of €1.08 in the final year of forecast compared to the current €1.28 EPS today. However, the expansion of the current 9.7% margin is not expected to be sustained, as it begins to contract to 8.4% by the end of 2022.

Next Steps:

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

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.