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Looking at Fabasoft AG's (ETR:FAA) recent earnings update on 31 March 2019, it seems that analyst forecasts are fairly bearish, with earnings expected to decline by 8.2% in the upcoming year relative to the past 5-year average growth rate of 23%. Currently with a trailing-twelve-month profit of €5.9m, the consensus growth rate suggests that earnings will drop to €5.4m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Fabasoft in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Check out our latest analysis for Fabasoft
How is Fabasoft going to perform in the near future?
The longer term view from the 1 analysts covering FAA is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of FAA's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 3.1% based on the most recent earnings level of €5.9m to the final forecast of €6.4m by 2022. EPS reaches €0.59 in the final year of forecast compared to the current €0.55 EPS today. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 15% to 12% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Fabasoft, I've compiled three relevant aspects you should further examine:
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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 Fabasoft 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 Fabasoft 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 Fabasoft? 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.