Looking at GPI SpA’s (BIT:GPI) earnings update in December 2017, analysts seem cautiously bearish, with earnings expected to grow by 14% in the upcoming year compared with the higher past 5-year average growth rate of 31%. Currently with trailing-twelve-month earnings of €8m, we can expect this to reach €9m by 2019. Below is a brief commentary on the longer term outlook the market has for GPI. For those interested in more of an analysis of the company, you can research its fundamentals here.

View our latest analysis for GPI

How will GPI perform in the near future?

The 1 analysts covering GPI view its longer term outlook with a 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 get an idea of the overall earnings growth trend for GPI, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

From the current net income level of €8m and the final forecast of €10m by 2021, the annual rate of growth for GPI’s earnings is 8.0%. EPS reaches €0.66 in the final year of forecast compared to the current €0.50 EPS today. Growth in the bottom line seems to suggest reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. Margins is currently sitting at 4.4%, which is expected to expand to 4.7% by 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For GPI, I’ve put together three essential factors you should look at:

1. 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.

2. Valuation: What is GPI 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 GPI is currently mispriced by the market.

3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of GPI? 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.