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In March 2019, Neste Oyj (HEL:NESTE) released its earnings update. Generally, analysts seem highly optimistic, with profits predicted to ramp up by an impressive 93% next year, compared with the historical 5-year average growth rate of 23%. With trailing-twelve-month net income at current levels of €778m, we should see this rise to €1.5b in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How will Neste Oyj perform in the near future?
The longer term expectations from the 17 analysts of NESTE is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of NESTE's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
By 2022, NESTE's earnings should reach €1.7b, from current levels of €778m, resulting in an annual growth rate of 9.8%. This leads to an EPS of €2.05 in the final year of projections relative to the current EPS of €1.01. With a current profit margin of 5.8%, this movement will result in a margin of 11% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Neste Oyj, I've put together three pertinent factors you should further examine:
- 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 Neste Oyj 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 Neste Oyj is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Neste Oyj? 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.