In This Article:
The latest earnings release Valeo SA’s (EPA:FR) announced in December 2018 signalled that the company experienced a immense headwind with earnings declining by -38%. Investors may find it useful to understand how market analysts predict Valeo’s earnings growth trajectory over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Check out our latest analysis for Valeo
Analysts’ outlook for the upcoming year seems positive, with earnings climbing by a robust 19%. This growth seems to continue into the following year with rates arriving at double digit 45% compared to today’s earnings, and finally hitting €943m by 2022.
While it’s helpful to be aware of the growth rate year by year relative to today’s value, it may be more valuable determining the rate at which the earnings are moving every year, on average. The advantage of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Valeo’s earnings trajectory over time, which may be more relevant for long term investors. 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 17%. This means, we can assume Valeo will grow its earnings by 17% every year for the next few years.
Next Steps:
For Valeo, there are three fundamental 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 FR 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 FR 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 FR? 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.