Since Continental Aktiengesellschaft (FRA:CON) released its earnings in March 2019, analyst forecasts appear to be pessimistic, with earnings expected to decline by 17% in the upcoming year relative to the past 5-year average growth rate of 6.1%. Currently with a trailing-twelve-month profit of €2.9b, the consensus growth rate suggests that earnings will drop to €2.4b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
How will Continental perform in the near future?
The view from 23 analysts over the next three years is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. 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 CON's earnings growth over these next few years.
By 2022, CON's earnings should reach €3.2b, from current levels of €2.9b, resulting in an annual growth rate of 12%. EPS reaches €15.35 in the final year of forecast compared to the current €14.49 EPS today. Margins are currently sitting at 6.5%, approximately the same as previous years. With analysts forecasting revenue growth of 0.10496 and CON's net income growth expected to roughly track that, this company may add value for shareholders over time.
Future outlook is only one aspect when you're building an investment case for a stock. For Continental, I've compiled three important factors you should further research:
- 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 Continental 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 Continental is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Continental? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at email@example.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.