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Grenke AG (ETR:GLJ): What Does The Future Look Like?

Since Grenke AG (ETR:GLJ) released its earnings in March 2019, the consensus outlook from analysts appear fairly confident, as a 22% increase in profits is expected 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 €126m, we should see this rise to €154m in 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Grenke in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.

See our latest analysis for Grenke

How will Grenke perform in the near future?

Over the next three years, it seems the consensus view of the 7 analysts covering GLJ is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. 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 GLJ's earnings growth over these next few years.

XTRA:GLJ Past and Future Earnings, July 25th 2019
XTRA:GLJ Past and Future Earnings, July 25th 2019

By 2022, GLJ's earnings should reach €203m, from current levels of €126m, resulting in an annual growth rate of 14%. This leads to an EPS of €4.15 in the final year of projections relative to the current EPS of €2.78. Margins are currently sitting at 29%, which is expected to expand to 30% by 2022.

Next Steps:

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

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  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 Grenke 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 Grenke is currently mispriced by the market.

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