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What Should You Know About Asseco Poland S.A.'s (WSE:ACP) Future?

Simply Wall St

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The latest earnings release Asseco Poland S.A.'s (WSE:ACP) announced in December 2018 confirmed that the business endured a significant headwind with earnings declining by -29%. Below is a brief commentary on my key takeaways on how market analysts view Asseco Poland's earnings growth trajectory over the next couple of years and whether the future looks brighter. 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.

Check out our latest analysis for Asseco Poland

Market analysts' consensus outlook for this coming year seems pessimistic, with earnings decreasing by -8.6%. In the next couple of years, earnings are expected to continue to be below today's level, with a decrease of -2.7% in 2021, eventually reaching zł324m in 2022.

WSE:ACP Past and Future Earnings, June 2nd 2019

While it is informative knowing the growth year by year relative to today’s level, it may be more valuable evaluating the rate at which the company is growing on average every year. The pro of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Asseco Poland's earnings trajectory over time, 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 0.7%. This means, we can assume Asseco Poland will grow its earnings by 0.7% every year for the next couple of years.

Next Steps:

For Asseco Poland, there are three key 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 ACP 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 ACP is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ACP? 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.