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Based on Vestas Wind Systems A/S’s (CPH:VWS) earnings update on 31 December 2018, analyst forecasts seem fairly subdued, with earnings expected to grow by 18% in the upcoming year compared with the higher past 5-year average growth rate of 25%. Presently, with latest-twelve-month earnings at €684m, we should see this growing to €804m by 2020. Below is a brief commentary on the longer term outlook the market has for Vestas Wind Systems. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
What can we expect from Vestas Wind Systems in the longer term?
The longer term expectations from the 17 analysts of VWS is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of VWS’s earnings growth over these next few years.
This results in an annual growth rate of 9.6% based on the most recent earnings level of €684m to the final forecast of €870m by 2022. This leads to an EPS of €4.55 in the final year of projections relative to the current EPS of €3.41. With a current profit margin of 6.7%, this movement will result in a margin of 7.6% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Vestas Wind Systems, there are three pertinent factors 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 Vestas Wind Systems 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 Vestas Wind Systems is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Vestas Wind Systems? 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.