What Are Analysts Saying About Lithium Americas Corp’s (TSE:LAC) Earnings Outlook?
The most recent earnings release Lithium Americas Corp’s (TSX:LAC) announced in September 2017 confirmed company earnings became less negative compared to the previous year’s level as a result of recent tailwinds Below, I’ve presented key growth figures on how market analysts perceive Lithium Americas’s earnings growth trajectory over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. View our latest analysis for Lithium Americas
Analysts’ outlook for the coming year seems pessimistic, with earnings becoming even more negative, reaching $-25.1M in 2018. Moreover, earnings are expected to fall off in the following year, before bouncing back up again to $-18.7M in 2020.
While it’s helpful to understand the rate of growth each year relative to today’s level, it may be more insightful estimating the rate at which the company is growing every year, on average. The pro of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Lithium Americas’s earnings trajectory over time, fluctuate up and down. 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 25.73%. This means, we can expect Lithium Americas will grow its earnings by 25.73% every year for the next few years.
Next Steps:
For Lithium Americas, there are three pertinent factors you should look at:
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 LAC’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 LAC? 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 pass 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.
