The most recent earnings announcement BKW AG's (VTX:BKW) released in March 2019 confirmed that the business experienced a immense headwind with earnings falling by -27%. Today I want to provide a brief commentary on how market analysts predict BKW'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.
Analysts' outlook for the upcoming year seems positive, with earnings increasing by a robust 10%. This growth seems to continue into the following year with rates reaching double digit 34% compared to today’s earnings, and finally hitting CHF279m by 2022.
Even though it is informative knowing the rate of growth each year relative to today’s level, it may be more beneficial to gauge the rate at which the company is growing every year, on average. The benefit of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of BKW's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 14%. This means, we can presume BKW will grow its earnings by 14% every year for the next couple of years.
For BKW, I've compiled three relevant 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 BKW 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 BKW is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BKW? 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.