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Looking at Sanofi's (EPA:SAN) earnings update on 31 December 2018, analysts seem fairly confident, with profits predicted to increase by 18% next year compared with the past 5-year average growth rate of -0.7%. With trailing-twelve-month net income at current levels of €4.3b, we should see this rise to €5.1b in 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Sanofi in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Exciting times ahead?
Over the next three years, it seems the consensus view of the 19 analysts covering SAN is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of €4.3b and the final forecast of €6.8b by 2022, the annual rate of growth for SAN’s earnings is 12%. This leads to an EPS of €5.42 in the final year of projections relative to the current EPS of €3.46. Margins are currently sitting at 12%, which is expected to expand to 17% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Sanofi, I've put together three pertinent factors 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 Sanofi 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 Sanofi is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Sanofi? 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 firstname.lastname@example.org. 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.