Sogeclair SA’s (EPA:SOG) latest earnings update in December 2018 suggested that the business experienced a robust tailwind, eventuating to a double-digit earnings growth of 15%. Today I want to provide a brief commentary on how market analysts view Sogeclair’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
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Analysts’ outlook for the coming year seems rather subdued, with earnings expanding by a single digit 9.3%. The growth outlook in the following year seems much more positive with rates reaching double digit 26% compared to today’s earnings, and finally hitting €9.6m by 2022.
Although it’s useful to be aware of the rate of growth year by year relative to today’s figure, it may be more valuable determining the rate at which the business is rising or falling on average every year. The pro of this technique is that we can get a better picture of the direction of Sogeclair’s earnings trajectory over the long run, irrespective of near term fluctuations, 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 15%. This means, we can assume Sogeclair will grow its earnings by 15% every year for the next few years.
For Sogeclair, I’ve put together three relevant aspects you should further research:
- 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 SOG 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 SOG is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SOG? 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.