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In December 2018, ASML Holding N.V. (AMS:ASML) released its latest earnings announcement, which confirmed that the business experienced a robust tailwind, leading to a double-digit earnings growth of 16%. Below is a brief commentary on my key takeaways on how market analysts view ASML Holding’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts’ prospects for this coming year seems rather subdued, with earnings climbing by a single digit 1.4%. The growth outlook in the following year seems much more buoyant with rates arriving at double digit 35% compared to today’s earnings, and finally hitting €4.2b by 2022.
Although it is informative understanding the growth each year relative to today’s figure, it may be more insightful to evaluate the rate at which the business is moving every year, on average. The pro of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of ASML Holding’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended 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 16%. This means that, we can presume ASML Holding will grow its earnings by 16% every year for the next few years.
For ASML Holding, I’ve compiled three key aspects you should look at:
- 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 ASML 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 ASML is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ASML? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.