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Ambea AB (publ)’s (STO:AMBEA) latest earnings announcement in December 2018 confirmed that the company experienced a strong tailwind, eventuating to a double-digit earnings growth of 31%. Investors may find it useful to understand how market analysts perceive Ambea’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Check out our latest analysis for Ambea
Market analysts’ prospects for the coming year seems positive, with earnings rising by a robust 19%. This growth seems to continue into the following year with rates arriving at double digit 94% compared to today’s earnings, and finally hitting kr654m by 2022.
Even though it’s useful to understand the growth rate each year relative to today’s value, it may be more beneficial determining the rate at which the company is growing every year, on average. The advantage of this method is that we can get a better picture of the direction of Ambea’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 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 28%. This means that, we can presume Ambea will grow its earnings by 28% every year for the next few years.
Next Steps:
For Ambea, I’ve compiled three important aspects you should further research:
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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.
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Valuation: What is AMBEA 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 AMBEA is currently mispriced by the market.
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Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of AMBEA? 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.