The latest earnings update Hexatronic Group AB (publ) (STO:HTRO) released in December 2018 suggested that the business experienced a major headwind with earnings deteriorating by -37%. Below, I've laid out key numbers on how market analysts view Hexatronic Group's earnings growth outlook over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts' expectations for the coming year seems positive, with earnings rising by a significant 54%. This strong growth in earnings is expected to continue, bringing the bottom line up to kr175m by 2022.
Even though it is useful to be aware of the rate of growth year by year relative to today’s figure, it may be more insightful to gauge the rate at which the company is moving every year, on average. The advantage of this method is that it ignores near term flucuations and accounts for the overarching direction of Hexatronic Group's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've appended 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 34%. This means, we can anticipate Hexatronic Group will grow its earnings by 34% every year for the next few years.
For Hexatronic Group, I've compiled three key factors you should further examine:
- 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 HTRO 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 HTRO is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of HTRO? 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 email@example.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.