Looking at Rheinmetall AG's (FRA:RHM) earnings update in March 2019, analyst consensus outlook seem pessimistic, with earnings expected to decline by 4.7% in the upcoming year against the past 5-year average growth rate of 35%. Presently, with latest-twelve-month earnings at €305m, we should see this fall to €291m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Exciting times ahead?
The 15 analysts covering RHM view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of RHM'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.
From the current net income level of €305m and the final forecast of €353m by 2022, the annual rate of growth for RHM’s earnings is 8.9%. EPS reaches €8.04 in the final year of forecast compared to the current €7.1 EPS today. However, the expansion of the current 5.0% margin is not expected to be sustained, as it begins to contract to 4.8% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Rheinmetall, I've put together three fundamental aspects 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 Rheinmetall 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 Rheinmetall is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Rheinmetall? 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 email@example.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.