U.S. markets closed
  • S&P 500

    -29.13 (-0.73%)
  • Dow 30

    -305.02 (-0.90%)
  • Nasdaq

    -77.39 (-0.70%)
  • Russell 2000

    -21.63 (-1.19%)
  • Crude Oil

    +0.13 (+0.18%)
  • Gold

    +7.90 (+0.44%)
  • Silver

    +0.43 (+1.87%)

    -0.0014 (-0.14%)
  • 10-Yr Bond

    +0.0760 (+2.18%)

    +0.0012 (+0.10%)

    -0.0600 (-0.04%)

    -58.09 (-0.34%)
  • CMC Crypto 200

    -4.14 (-1.02%)
  • FTSE 100

    +4.46 (+0.06%)
  • Nikkei 225

    +326.58 (+1.18%)

Knorr-Bremse Aktiengesellschaft (ETR:KBX): Immense Growth Potential?

In March 2019, Knorr-Bremse Aktiengesellschaft (ETR:KBX) released its earnings update. Generally, analysts seem cautiously optimistic, with earnings expected to grow by 13% in the upcoming year compared with the past 5-year average growth rate of 4.6%. With trailing-twelve-month net income at current levels of €593m, we should see this rise to €671m in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

Check out our latest analysis for Knorr-Bremse

Can we expect Knorr-Bremse to keep growing?

The longer term view from the 10 analysts covering KBX 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. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

XTRA:KBX Past and Future Earnings, August 16th 2019
XTRA:KBX Past and Future Earnings, August 16th 2019

From the current net income level of €593m and the final forecast of €753m by 2022, the annual rate of growth for KBX’s earnings is 6.1%. This leads to an EPS of €4.77 in the final year of projections relative to the current EPS of €3.68. With a current profit margin of 8.9%, this movement will result in a margin of 10% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Knorr-Bremse, I've compiled three important 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 Knorr-Bremse 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 Knorr-Bremse is currently mispriced by the market.

  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Knorr-Bremse? 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.