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Koninklijke Philips N.V. (AMS:PHIA): Poised For Long Term Success?

Simply Wall St

As Koninklijke Philips N.V. ( AMS:PHIA ) announced its earnings release on 31 March 2019, it seems that analyst expectations are fairly bearish, as a 15% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 22%. By 2020, we can expect Koninklijke Philips’s bottom line to reach €1.5b, a jump from the current trailing-twelve-month of €1.3b. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here .

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Check out our latest analysis for Koninklijke Philips

How is Koninklijke Philips going to perform in the near future?

Longer term expectations from the 16 analysts covering PHIA’s stock 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. To get an idea of the overall earnings growth trend for PHIA, 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.

ENXTAM:PHIA Past and Future Earnings, May 22nd 2019

By 2022, PHIA's earnings should reach €2.0b, from current levels of €1.3b, resulting in an annual growth rate of 14%. This leads to an EPS of €2.3 in the final year of projections relative to the current EPS of €1.41. In 2022, PHIA's profit margin will have expanded from 7.2% to 9.5%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Koninklijke Philips, I've put together three key factors you should look at:

  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 Koninklijke Philips 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 Koninklijke Philips is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Koninklijke Philips? 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.