Will Lisi S.A.'s (EPA:FII) Earnings Grow Over The Next Few Years?

Simply Wall St

The most recent earnings update Lisi S.A.'s (EPA:FII) released in December 2018 indicated that the company faced a major headwind with earnings declining by -15%. Investors may find it useful to understand how market analysts perceive Lisi's earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

Check out our latest analysis for Lisi

Analysts' expectations for the upcoming year seems rather muted, with earnings expanding by a single digit 8.9%. The growth outlook in the following year seems much more optimistic with rates generating double digit 25% compared to today’s earnings, and finally hitting €127m by 2022.

ENXTPA:FII Past and Future Earnings, April 16th 2019

Although it is helpful to understand the growth rate each year relative to today’s level, it may be more beneficial to evaluate the rate at which the business is growing every year, on average. The benefit of this approach is that we can get a bigger picture of the direction of Lisi's earnings trajectory over the long run, irrespective of near term fluctuations, 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 11%. This means that, we can presume Lisi will grow its earnings by 11% every year for the next couple of years.

Next Steps:

For Lisi, I've compiled three fundamental factors you should further examine:

  1. 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.
  2. Valuation: What is FII 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 FII is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of FII? 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.