U.S. Markets closed

Iren SpA (BIT:IRE): Are Analysts Right About The Drop In Earnings?

Autumn Haas

Based on Iren SpA’s (BIT:IRE) earnings update in September 2018, analyst consensus outlook appear bearish, with earnings expected to decline by -11% in the upcoming year against the past 5-year average growth rate of 27%. With trailing-twelve-month net income at current levels of €238m, the consensus growth rate suggests that earnings will decline to €211m by 2019. Below is a brief commentary around Iren’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

See our latest analysis for Iren

How is Iren going to perform in the near future?

The longer term view from the 6 analysts covering IRE 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 IRE’s earnings growth over these next few years.

BIT:IRE Future Profit December 25th 18

By 2021, IRE’s earnings should reach €222m, from current levels of €238m, resulting in an annual growth rate of 0.7%. EPS reaches €0.21 in the final year of forecast compared to the current €0.19 EPS today. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 6.7% to 5.7% by the end of 2021.

Next Steps:

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