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EssilorLuxottica Société anonyme (EPA:EL): Poised For Long Term Success?

Simply Wall St

Looking at EssilorLuxottica Société anonyme's (EPA:EL) earnings update in December 2018, analyst consensus outlook appear vastly optimistic, with profits predicted to ramp up by an impressive 71% next year, against the historical 5-year average growth rate of 4.1%. Presently, with latest-twelve-month earnings at €1.1b, we should see this growing to €1.9b by 2020. Below is a brief commentary on the longer term outlook the market has for EssilorLuxottica Société anonyme. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

Check out our latest analysis for EssilorLuxottica Société anonyme

Can we expect EssilorLuxottica Société anonyme to keep growing?

The longer term view from the 14 analysts covering EL is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of EL's earnings growth over these next few years.

ENXTPA:EL Past and Future Earnings, July 30th 2019

This results in an annual growth rate of 11% based on the most recent earnings level of €1.1b to the final forecast of €2.1b by 2022. EPS reaches €4.77 in the final year of forecast compared to the current €4.17 EPS today. Margins are currently sitting at 10%, which is expected to expand to 11% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For EssilorLuxottica Société anonyme, I've compiled three essential factors 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 EssilorLuxottica Société anonyme 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 EssilorLuxottica Société anonyme is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of EssilorLuxottica Société anonyme? 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.