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What Should Investors Know About Topdanmark A/S's (CPH:TOP) Future?

Simply Wall St

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Looking at Topdanmark A/S's (CPH:TOP) earnings update in March 2019, it seems that analyst expectations are fairly bearish, as a 0.05% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 2.5%. With trailing-twelve-month net income at current levels of ø1.3b, we should see this rise to ø1.3b in 2020. Below is a brief commentary around Topdanmark's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.

See our latest analysis for Topdanmark

How will Topdanmark perform in the near future?

Over the next three years, it seems the consensus view of the 8 analysts covering TOP is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly 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 TOP's earnings growth over these next few years.

CPSE:TOP Past and Future Earnings, July 17th 2019

From the current net income level of ø1.3b and the final forecast of ø1.4b by 2022, the annual rate of growth for TOP’s earnings is 1.0%. This leads to an EPS of DKK17.57 in the final year of projections relative to the current EPS of DKK15.43. Margins are currently sitting at 7.9%, which is expected to expand to 19% by 2022.

Next Steps:

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