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STEF S.A. (EPA:STF): What Does The Future Look Like?

Simply Wall St

Based on STEF S.A.'s (EPA:STF) earnings update in December 2018, it seems that analyst expectations are fairly bearish, with earnings expected to grow by 7.5% in the upcoming year against the higher past 5-year average growth rate of 11%. Currently with trailing-twelve-month earnings of €94m, we can expect this to reach €102m by 2020. Below is a brief commentary on the longer term outlook the market has for STEF. For those interested in more of an analysis of the company, you can research its fundamentals here.

Check out our latest analysis for STEF

What can we expect from STEF in the longer term?

The 4 analysts covering STF view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. 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.

ENXTPA:STF Past and Future Earnings, August 31st 2019

This results in an annual growth rate of 3.4% based on the most recent earnings level of €94m to the final forecast of €106m by 2022. EPS reaches €8.28 in the final year of forecast compared to the current €7.66 EPS today. With a current profit margin of 2.9%, this movement will result in a margin of 3.0% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For STEF, I've put together three key aspects you should look at:

  1. 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.
  2. Valuation: What is STEF 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 STEF is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of STEF? 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 editorial-team@simplywallst.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.