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What Are Analysts Saying About St Barbara Limited's (ASX:SBM) Future?

Simply Wall St

St Barbara Limited's (ASX:SBM) latest earnings update in August 2019 showed that the business faced a major headwind with earnings falling by -36%. Below is a brief commentary on my key takeaways on how market analysts view St Barbara's earnings growth outlook over the next few 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.

See our latest analysis for St Barbara

Analysts' outlook for this coming year seems buoyant, with earnings increasing by a robust 34%. However, earnings is forecasted to fall thereafter, reaching AU$171m in 2022.

ASX:SBM Past and Future Earnings, September 16th 2019

While it is useful to be aware of the rate of growth year by year relative to today’s value, it may be more beneficial evaluating the rate at which the business is moving on average every year. The pro of this method is that it ignores near term flucuations and accounts for the overarching direction of St Barbara's earnings trajectory over time, be more volatile. To compute this rate, I've appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 4.9%. This means, we can assume St Barbara will grow its earnings by 4.9% every year for the next few years.

Next Steps:

For St Barbara, there are three relevant factors you should further examine:

  1. Valuation: What is SBM 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 SBM is currently mispriced by the market.
  2. Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for SBM'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 SBM? 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 editorial-team@simplywallst.com. 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.