Royal Dutch Shell plc’s (ENXTAM:RDSA) latest earnings announcement in December 2017 signalled that the business benefited from a significant tailwind, more than doubling its earnings from the prior year. Below, I’ve laid out key numbers on how market analysts view Royal Dutch Shell’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. Check out our latest analysis for Royal Dutch Shell
Market analysts’ prospects for the upcoming year seems positive, with earnings increasing by a significant 54.48%. This strong level of earnings is expected to be maintained in the following year, before rising up further to US$21.41B in 2021.
While it’s helpful to understand the growth rate each year relative to today’s level, it may be more beneficial determining the rate at which the earnings are moving every year, on average. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Royal Dutch Shell’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 11.04%. This means that, we can presume Royal Dutch Shell will grow its earnings by 11.04% every year for the next couple of years.
Next Steps:
For Royal Dutch Shell, there are three relevant factors you should further examine:
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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 RDSA 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 RDSA 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 RDSA? 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.