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NNIT A/S’s (CPH:NNIT) announced its latest earnings update in December 2018, which signalled that the business benefited from a slight tailwind, leading to a single-digit earnings growth of 8.8%. Below is a brief commentary on my key takeaways on how market analysts predict NNIT’s earnings growth outlook over the next few 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 next year seems rather muted, with earnings increasing by a single digit 6.4%. The growth outlook in the following year seems much more buoyant with rates reaching double digit 16% compared to today’s earnings, and finally hitting ø285m by 2022.
While it is useful to be aware of the growth each year relative to today’s value, it may be more beneficial determining the rate at which the earnings are growing on average every year. The benefit of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of NNIT’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put 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 6.6%. This means, we can expect NNIT will grow its earnings by 6.6% every year for the next couple of years.
Next Steps:
For NNIT, there are three important factors 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 NNIT 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 NNIT 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 NNIT? 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. On rare occasion, data errors may occur. Thank you for reading.