Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Looking at Murphy Oil Corporation's (NYSE:MUR) earnings update in March 2019, analyst consensus outlook appear pessimistic, as a 9.3% fall in profits is expected in the upcoming year. However, compared to its 5-year track record of the average earnings growth rate of -12%, this is still an improvement. With trailing-twelve-month net income at current levels of US$415m, the consensus growth rate suggests that earnings will decline to US$376m 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 Murphy Oil going to perform in the near future?
The longer term expectations from the 11 analysts of MUR is tilted towards the negative sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2022, MUR's earnings should reach US$330m, from current levels of US$415m, resulting in an annual growth rate of -2.7%. EPS reaches $1.98 in the final year of forecast compared to the current $2.4 EPS today. The main reason for MUR’s earnings contraction is cost outpacing top line growth of 5.7% over the next few years. Furthermore, the current 16% margin is expected to contract to 11% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Murphy Oil, I've put together three relevant 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 Murphy Oil 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 Murphy Oil is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Murphy Oil? 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.