In This Article:
Based on Norsk Hydro ASA’s (OB:NHY) earnings update in December 2017, analyst forecasts appear to be pessimistic, with profits predicted to drop by -3.81% next year against the past 5-year average growth rate of 11.90%. With net income at current levels of ØRE8.78B, the consensus growth rate suggests that earnings will decline to ØRE8.45B by 2019. Below is a brief commentary on the longer term outlook the market has for Norsk Hydro. For those interested in more of an analysis of the company, you can research its fundamentals here. View our latest analysis for Norsk Hydro
How is Norsk Hydro going to perform in the near future?
Over the next three years, it seems the consensus view of the 17 analysts covering NHY is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of NHY’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
By 2021, NHY’s earnings should reach ØRE9.69B, from current levels of ØRE8.78B, resulting in an annual growth rate of 3.71%. This leads to an EPS of NOK4.78 in the final year of projections relative to the current EPS of NOK4.3. Growth in earnings appears to be a result of a higher revenue growth of 8.70% outpacing cost increases. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 8.04% to 6.09% by the end of 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Norsk Hydro, I’ve compiled three relevant aspects you should further examine:
-
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 Norsk Hydro 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 Norsk Hydro is currently mispriced by the market.
-
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Norsk Hydro? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.