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What Should You Know About Rapala VMC Corporation's (HEL:RAP1V) Earnings Trend?

Simply Wall St

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Rapala VMC Corporation's (HEL:RAP1V) most recent earnings update in December 2018 confirmed that the company gained from a major tailwind, more than doubling its earnings from the prior year. Below, I've laid out key numbers on how market analysts view Rapala VMC's earnings growth trajectory over the next few 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 Rapala VMC

Market analysts' prospects for the upcoming year seems positive, with earnings growing by a significant 86%. This strong growth in earnings is expected to continue, bringing the bottom line up to €16m by 2022.

HLSE:RAP1V Past and Future Earnings, June 18th 2019

Even though it is useful to understand the rate of growth year by year relative to today’s level, it may be more insightful to evaluate the rate at which the company is moving on average every year. The benefit of this approach is that we can get a bigger picture of the direction of Rapala VMC'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 analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 23%. This means, we can anticipate Rapala VMC will grow its earnings by 23% every year for the next few years.

Next Steps:

For Rapala VMC, 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 RAP1V 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 RAP1V is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of RAP1V? 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.