Korian’s (ENXTPA:KORI) latest earnings announcement in December 2017 signalled that the company benefited from a strong tailwind, eventuating to a double-digit earnings growth of 24.15%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Korian’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. View our latest analysis for Korian
Analysts’ expectations for the upcoming year seems pessimistic, with earnings falling by a double-digit -42.56%. In the next couple of years, earnings are expected to continue to be below today’s level, with a decline of -28.58% in 2020, eventually reaching €116.42M in 2021.
Even though it is informative understanding the rate of growth year by year relative to today’s level, it may be more valuable to gauge the rate at which the company is growing every year, on average. The pro of this approach is that we can get a bigger picture of the direction of Korian’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve inserted 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 -1.73%. This means, we can assume Korian will chip away at a rate of -1.73% every year for the next couple of years.
Next Steps:
For Korian, I’ve compiled 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 KORI 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 KORI 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 KORI? 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 pass 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.