After Magnolia Bostad AB (publ)’s (STO:MAG) earnings announcement in June 2018, analyst consensus outlook appear cautiously optimistic, with earnings expected to grow by 25% in the upcoming year, though this is relatively lower than the historical 5-year average earnings growth of 30%. By 2019, we can expect Magnolia Bostad’s bottom line to reach kr345m, a jump from the current trailing-twelve-month kr277m. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
See our latest analysis for Magnolia Bostad
What can we expect from Magnolia Bostad in the longer term?
Longer term expectations from the 3 analysts covering MAG’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. 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.
This results in an annual growth rate of 15% based on the most recent earnings level of kr203m to the final forecast of kr345m by 2021. This leads to an EPS of SEK11.76 in the final year of projections relative to the current EPS of SEK5.37. The bottom-line growth seems to be caused by cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. With a current profit margin of 11%, this movement will result in a margin of 16% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Magnolia Bostad, there are 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 Magnolia Bostad 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 Magnolia Bostad 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 Magnolia Bostad? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.