Looking at Evolution Mining Limited’s (ASX:EVN) earnings update in June 2018, analyst forecasts seem pessimistic, with profits predicted to drop by -16% next year compared with the past 5-year average growth rate of 67%. With trailing-twelve-month net income at current levels of AU$263m, the consensus growth rate suggests that earnings will decline to AU$222m by 2019. Below is a brief commentary on the longer term outlook the market has for Evolution Mining. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Exciting times ahead?
The 11 analysts covering EVN view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of EVN’s earnings growth over these next few years.
From the current net income level of AU$263m and the final forecast of AU$327m by 2021, the annual rate of growth for EVN’s earnings is 9.6%. EPS reaches A$0.19 in the final year of forecast compared to the current A$0.16 EPS today. Margins are currently sitting at 17%, which is expected to expand to 21% by 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Evolution Mining, there are three pertinent factors 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 Evolution Mining 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 Evolution Mining is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Evolution Mining? 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 past 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. For errors that warrant correction please contact the editor at firstname.lastname@example.org.