HOCHTIEF Aktiengesellschaft's (FRA:HOT) most recent earnings announcement in December 2018 indicated that the business gained from a robust tailwind, leading to a double-digit earnings growth of 29%. Below is my commentary, albeit very simple and high-level, on how market analysts view HOCHTIEF's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. 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' expectations for the upcoming year seems buoyant, with earnings climbing by a robust 17%. This growth seems to continue into the following year with rates reaching double digit 27% compared to today’s earnings, and finally hitting €737m by 2022.
Even though it’s helpful to understand the growth rate year by year relative to today’s level, it may be more valuable to analyze the rate at which the company is moving every year, on average. The advantage of this approach is that we can get a better picture of the direction of HOCHTIEF'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 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 10%. This means that, we can assume HOCHTIEF will grow its earnings by 10% every year for the next few years.
For HOCHTIEF, I've compiled three key factors 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 HOT 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 HOT is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of HOT? 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 email@example.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.