After Regis Resources Limited’s (ASX:RRL) recent earnings announcement in June 2018, the consensus outlook from analysts appear pessimistic, with profits predicted to drop by -9.5% next year relative to the past 5-year average growth rate of 29%. Presently, with latest-twelve-month earnings at AU$174m, we should see this fall to AU$158m by 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Exciting times ahead?
Longer term expectations from the 14 analysts covering RRL’s stock is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. 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 2021, RRL’s earnings should reach AU$210m, from current levels of AU$174m, resulting in an annual growth rate of 8.6%. This leads to an EPS of A$0.40 in the final year of projections relative to the current EPS of A$0.35. The primary reason for earnings growth is due to a high top-line growth of 9.7% falling down into the bottom line. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 29% to 27% by the end of 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Regis Resources, I’ve compiled three fundamental aspects you should look at:
- 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 Regis Resources 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 Regis Resources is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Regis Resources? 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.