In This Article:
Sandfire Resources NL's (ASX:SFR) announced its latest earnings update in August 2019, which indicated that the company faced a major headwind with earnings declining by -13%. Below is my commentary, albeit very simple and high-level, on how market analysts view Sandfire Resources's earnings growth outlook over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
View our latest analysis for Sandfire Resources
Market analysts' prospects for this coming year seems optimistic, with earnings rising by a robust 38%. This growth seems to continue into the following year with rates reaching double digit 66% compared to today’s earnings and declines to AU$140m by 2022.
Although it’s informative understanding the rate of growth each year relative to today’s value, it may be more beneficial to evaluate the rate at which the company is moving on average every year. The advantage of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Sandfire Resources's earnings trajectory over time, fluctuate up and down. To calculate this rate, I've inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 6.4%. This means that, we can assume Sandfire Resources will grow its earnings by 6.4% every year for the next couple of years.
Next Steps:
For Sandfire Resources, there are three fundamental factors you should further research:
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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.
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Valuation: What is SFR 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 SFR is currently mispriced by the market.
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Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SFR? 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.