SFS Group AG (VTX:SFSN): Should The Future Outlook Worry You?

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After SFS Group AG's (VTX:SFSN) recent earnings announcement in December 2018, the consensus outlook from analysts appear bearish, with earnings expected to decline by 2.7% in the upcoming year relative to the past 5-year average growth rate of 16%. With trailing-twelve-month net income at current levels of CHF193m, the consensus growth rate suggests that earnings will decline to CHF188m by 2020. Below is a brief commentary on the longer term outlook the market has for SFS Group. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

Check out our latest analysis for SFS Group

How will SFS Group perform in the near future?

The 7 analysts covering SFSN view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

SWX:SFSN Past and Future Earnings, July 18th 2019
SWX:SFSN Past and Future Earnings, July 18th 2019

From the current net income level of CHF193m and the final forecast of CHF213m by 2022, the annual rate of growth for SFSN’s earnings is 4.5%. This leads to an EPS of CHF5.81 in the final year of projections relative to the current EPS of CHF5.14. However, the expansion of the current 11% margin is not expected to be sustained, as it begins to contract to 11% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For SFS Group, I've compiled three relevant aspects you should further research:

  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 SFS Group 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 SFS Group is currently mispriced by the market.

  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SFS Group? 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.