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The latest earnings announcement OMV Aktiengesellschaft (VIE:OMV) released in December 2018 signalled that the company benefited from a significant tailwind, more than doubling its earnings from the prior year. Today I want to provide a brief commentary on how market analysts predict OMV’s earnings growth outlook over the next couple of 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 OMV
Market analysts’ prospects for this coming year seems rather subdued, with earnings increasing by a single digit 8.4%. The growth outlook in the following year seems much more buoyant with rates arriving at double digit 31% compared to today’s earnings, and finally hitting €1.9b by 2022.
While it is informative knowing the growth rate year by year relative to today’s level, it may be more insightful to gauge the rate at which the earnings are rising or falling on average every year. The advantage of this approach is that it ignores near term flucuations and accounts for the overarching direction of OMV’s earnings trajectory over time, fluctuate up and down. To calculate 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 8.8%. This means that, we can presume OMV will grow its earnings by 8.8% every year for the next few years.
Next Steps:
For OMV, there are three key 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 OMV 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 OMV 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 OMV? 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.