Based on KWS Saat SE’s (FRA:KWS) recently announced earnings update on 30 June 2018, it seems that analyst forecasts are fairly bearish, as a -1.6% fall in profits is expected in the upcoming year relative to the past 5-year average growth rate of 4.8%. Presently, with latest-twelve-month earnings at €100m, we should see this fall to €98m by 2019. Below is a brief commentary on the longer term outlook the market has for KWS Saat. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
How will KWS Saat perform in the near future?
The longer term view from the 5 analysts covering KWS is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for KWS, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 3.9% based on the most recent earnings level of €100m to the final forecast of €116m by 2021. This leads to an EPS of €16.7 in the final year of projections relative to the current EPS of €15.08. Growth in earnings appears to be a result of top-line expansion of 4.6%, dropping down to the bottome-line. This initial high-growth revenue squeezes KWS’s margins. However, analysts are expecting earnings growth to catch up, and current margins of 9.3% to expand to 9.6% by the end of 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For KWS Saat, I’ve put together three key aspects you should look at:
- 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 KWS Saat 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 KWS Saat is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of KWS Saat? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.