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What Should You Know About Carlsberg A/S's (CPH:CARL B) Earnings Trend?

Simply Wall St

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The latest earnings announcement Carlsberg A/S (CPH:CARL B) released in December 2018 showed that the business gained from a significant tailwind, more than doubling its earnings from the prior year. Below is my commentary, albeit very simple and high-level, on how market analysts view Carlsberg's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

See our latest analysis for Carlsberg

Market analysts' consensus outlook for next year seems positive, with earnings rising by a robust 11%. This growth seems to continue into the following year with rates reaching double digit 17% compared to today’s earnings, and finally hitting ø6.7b by 2022.

CPSE:CARL B Past and Future Earnings, May 9th 2019

While it’s helpful to be aware of the rate of growth year by year relative to today’s figure, it may be more insightful to estimate the rate at which the company is moving on average every year. The advantage of this approach is that we can get a better picture of the direction of Carlsberg's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate 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 7.2%. This means that, we can expect Carlsberg will grow its earnings by 7.2% every year for the next few years.

Next Steps:

For Carlsberg, I've compiled three essential 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 CARL B 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 CARL B is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CARL B? 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.