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After Boliden AB’s (STO:BOL) earnings announcement on 31 December 2018, analyst forecasts seem bearish, with earnings expected to decline by -18% in the upcoming year compared with the past 5-year average growth rate of 36%. Presently, with latest-twelve-month earnings at kr7.2b, we should see this fall to kr5.9b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
How is Boliden going to perform in the near future?
The 14 analysts covering BOL view its longer term outlook with a negative 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 BOL’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.
This results in an annual growth rate of -6.9% based on the most recent earnings level of kr7.2b to the final forecast of kr5.9b by 2022. This leads to an EPS of SEK23.21 in the final year of projections relative to the current EPS of SEK26.32. Earnings decline appears to be a result of cost outpacing top line growth of 0.8% over the next few years. With this high cost growth, margins is expected to contract from 14% to 11% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Boliden, there are three essential factors you should further research:
- 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 Boliden 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 Boliden is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Boliden? 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 firstname.lastname@example.org. 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.