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Mondi plc (LON:MNDI): Is It A Good Long Term Opportunity?

Simply Wall St

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The most recent earnings announcement Mondi plc's (LON:MNDI) released in December 2018 confirmed that the company experienced a strong tailwind, leading to a double-digit earnings growth of 23%. Below, I've presented key growth figures on how market analysts view Mondi's earnings growth trajectory 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.

View our latest analysis for Mondi

Market analysts' prospects for next year seems rather subdued, with earnings climbing by a single digit 7.8%. The growth outlook in the following year seems much more optimistic with rates arriving at double digit 10% compared to today’s earnings, and finally hitting €929m by 2022.

LSE:MNDI Past and Future Earnings, April 30th 2019

Even though it is useful to understand the rate of growth each year relative to today’s value, it may be more valuable determining the rate at which the business is moving every year, on average. The advantage of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Mondi'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 3.9%. This means that, we can anticipate Mondi will grow its earnings by 3.9% every year for the next couple of years.

Next Steps:

For Mondi, I've compiled three essential factors you should further examine:

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