Orion Oyj (HEL:ORNBV): Will The Growth Last?
In September 2018, Orion Oyj (HEL:ORNBV) released its earnings update. Generally, analysts seem cautiously optimistic, with earnings expected to grow by 22% in the upcoming year against the past 5-year average growth rate of 1.5%. With trailing-twelve-month net income at current levels of €226m, we should see this rise to €275m in 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Orion Oyj in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Check out our latest analysis for Orion Oyj
Can we expect Orion Oyj to keep growing?
The longer term view from the 7 analysts covering ORNBV is one of negative sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of ORNBV’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.
This results in an annual growth rate of -5.6% based on the most recent earnings level of €226m to the final forecast of €264m by 2022. However, if we exclude extraordinary items from earnings, we see that the profits is predicted to rise over time, resulting in an EPS of €1.71 in the final year of forecast compared to the current €1.61 EPS today. Fall in earnings appears to be a result of cost growth exceeding top-line growth of 3.9% in the next three years. But by the end of 2022, analysts are expecting slower cost growth, resulting in a margin expansion, from the recent 21% to 23%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Orion Oyj, I’ve compiled three important aspects 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 Orion 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 Orion Oyj is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Orion 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!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
