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Looking at Covivio's (EPA:COV) earnings update in December 2018, analyst consensus outlook appear bearish, with profits predicted to drop by 3.0% next year relative to the past 5-year average growth rate of 30%. Presently, with latest-twelve-month earnings at €750m, we should see this fall to €727m by 2020. Below is a brief commentary on the longer term outlook the market has for Covivio. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Check out our latest analysis for Covivio
How is Covivio going to perform in the near future?
The view from 8 analysts over the next three years is one of negative sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. 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 COV's earnings growth over these next few years.
By 2022, COV's earnings should reach €510m, from current levels of €750m, resulting in an annual growth rate of -4.5%. However, if we exclude extraordinary items from earnings, we see that the profits is predicted to rise over time, resulting in an EPS of €10.1 in the final year of forecast compared to the current €9.99 EPS today. The main reason for COV’s earnings contraction is top-line expansion of 1.1%, which is predicted to lag cost growth leading up to 2022. Furthermore, the current 69% margin is expected to contract to 46% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Covivio, there are three pertinent aspects you should look at:
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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 Covivio 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 Covivio 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 Covivio? 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.