The latest earnings release Kering SA’s (EPA:KER) announced in December 2018 signalled that the business experienced a strong tailwind, leading to a high double-digit earnings growth of 57%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Kering’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.
Market analysts’ prospects for next year seems positive, with earnings growing by a robust 21%. This growth seems to continue into the following year with rates arriving at double digit 38% compared to today’s earnings, and finally hitting €3.9b by 2022.
Although it’s useful to be aware of the growth each year relative to today’s figure, it may be more beneficial determining the rate at which the earnings are growing on average every year. The benefit of this technique is that we can get a bigger picture of the direction of Kering’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 13%. This means that, we can anticipate Kering will grow its earnings by 13% every year for the next couple of years.
For Kering, I’ve compiled three essential aspects you should further research:
- 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 KER 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 KER is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of KER? 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 firstname.lastname@example.org. 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.