What Should We Expect From ISS A/S's (CPH:ISS) Earnings Over The Next Few Years?
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ISS A/S's (CPH:ISS) announced its latest earnings update in December 2018, which revealed that the business faced a immense headwind with earnings declining by -43%. Below, I've laid out key growth figures on how market analysts view ISS's earnings growth outlook over the next couple of 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.
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Analysts' expectations for the coming year seems buoyant, with earnings increasing by a significant 85%. This strong growth in earnings is expected to continue, bringing the bottom line up to ø2.9b by 2022.
Although it is useful to be aware of the growth rate each year relative to today’s value, it may be more beneficial to determine the rate at which the company is growing every year, on average. The advantage of this approach is that it ignores near term flucuations and accounts for the overarching direction of ISS's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put 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 24%. This means, we can presume ISS will grow its earnings by 24% every year for the next few years.
Next Steps:
For ISS, there are three essential aspects 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 ISS 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 ISS is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ISS? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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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.
