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L'Occitane International S.A. (HKG:973): Will The Growth Last?

Simply Wall St

On 31 March 2019, L'Occitane International S.A. (HKG:973) released its earnings update. Generally, analyst consensus outlook appear cautiously optimistic, with profits predicted to increase by 3.9% next year compared with the past 5-year average growth rate of -0.2%. Presently, with latest-twelve-month earnings at €118m, we should see this growing to €123m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for L'Occitane International in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.

View our latest analysis for L'Occitane International

Can we expect L'Occitane International to keep growing?

Longer term expectations from the 7 analysts covering 973’s stock is one of 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 973'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.

SEHK:973 Past and Future Earnings, July 22nd 2019

This results in an annual growth rate of 10% based on the most recent earnings level of €118m to the final forecast of €157m by 2022. EPS reaches €0.11 in the final year of forecast compared to the current €0.081 EPS today. In 2022, 973's profit margin will have expanded from 8.3% to 8.7%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For L'Occitane International, there are three important aspects you should further research:

  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 L'Occitane International 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 L'Occitane International is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of L'Occitane International? 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.