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SEB SA's (EPA:SK) announced its latest earnings update in December 2018, which indicated that the business experienced a robust tailwind, leading to a double-digit earnings growth of 12%. Below is a brief commentary on my key takeaways on how market analysts perceive SEB'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.
Market analysts' consensus outlook for next year seems optimistic, with earnings expanding by a robust 10%. This growth seems to continue into the following year with rates reaching double digit 23% compared to today’s earnings, and finally hitting €552m by 2022.
Even though it is helpful to be aware of the growth rate each year relative to today’s figure, it may be more insightful gauging the rate at which the company is moving on average every year. The pro of this method is that it ignores near term flucuations and accounts for the overarching direction of SEB's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 9.4%. This means, we can expect SEB will grow its earnings by 9.4% every year for the next few years.
For SEB, there are three relevant factors 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 SK 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 SK is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SK? 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.