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The most recent earnings release Neopost S.A.’s (EPA:NEO) announced in January 2019 confirmed that the company experienced a major headwind with earnings declining by -34%. Below, I’ve presented key growth figures on how market analysts predict Neopost’s earnings growth trajectory over the next couple of 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.
Market analysts’ prospects for next year seems optimistic, with earnings expanding by a robust 12%. This growth seems to continue into the following year with rates arriving at double digit 27% compared to today’s earnings, and finally hitting €115m by 2022.
While it is useful to be aware of the rate of growth each year relative to today’s figure, it may be more valuable to gauge the rate at which the company is moving every year, on average. The benefit of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Neopost’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 10%. This means, we can assume Neopost will grow its earnings by 10% every year for the next couple of years.
For Neopost, I’ve compiled three important factors you should further research:
- 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.
- Valuation: What is NEO 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 NEO is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of NEO? 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 firstname.lastname@example.org. 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.
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