In December 2018, Antofagasta plc (LON:ANTO) announced its most recent earnings update, which signalled that the business endured a significant headwind with earnings declining by -34%. Below is a brief commentary on my key takeaways on how market analysts view Antofagasta's earnings growth outlook over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
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Analysts' expectations for the coming year seems optimistic, with earnings increasing by a robust 43%. However, earnings is expected to fall slightly in the following year before rising again to US$692m in 2022.
Although it is helpful to understand the rate of growth each year relative to today’s level, it may be more insightful to analyze the rate at which the business is rising or falling on average every year. The pro of this technique is that we can get a bigger picture of the direction of Antofagasta's earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To calculate this rate, I've inserted 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 11%. This means that, we can presume Antofagasta will grow its earnings by 11% every year for the next few years.
For Antofagasta, there are three essential 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 ANTO 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 ANTO is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ANTO? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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