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Abraxas Petroleum Corporation (NASDAQ:AXAS): Is It A Good Long Term Opportunity?

Simply Wall St

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The most recent earnings update Abraxas Petroleum Corporation's (NASDAQ:AXAS) released in December 2018 indicated that the company gained from a major tailwind, more than doubling its earnings from the prior year. Below, I've presented key growth figures on how market analysts predict Abraxas Petroleum's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

Check out our latest analysis for Abraxas Petroleum

Market analysts' consensus outlook for next year seems pessimistic, with earnings declining by a double-digit -16%. However, the next few years show a contrast, with earnings growth becoming positive in 2021, with the bottom line increasing to US$94m in 2022.

NasdaqCM:AXAS Past and Future Earnings, April 1st 2019

Even though it’s useful to understand the growth rate each year relative to today’s figure, it may be more beneficial to evaluate the rate at which the business is rising or falling on average every year. The advantage of this technique is that we can get a bigger picture of the direction of Abraxas Petroleum's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put 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 15%. This means that, we can presume Abraxas Petroleum will grow its earnings by 15% every year for the next couple of years.

Next Steps:

For Abraxas Petroleum, I've compiled three pertinent factors you should further examine:

  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. Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for AXAS's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of AXAS? 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.