Equinor ASA’s (OB:EQNR) released its most recent earnings update in December 2018, which indicated that the company experienced a large tailwind, eventuating to a high double-digit earnings growth of 64%. Below, I’ve laid out key growth figures on how market analysts perceive Equinor’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Market analysts’ prospects for the upcoming year seems pessimistic, with earnings falling by a double-digit -17%. In the next couple of years, earnings will begin to improve, climbing year on year, and arriving at US$7.2b by 2022.
Even though it is useful to understand the growth rate each year relative to today’s figure, it may be more beneficial to analyze the rate at which the earnings are moving on average every year. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Equinor’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve inserted 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 3.3%. This means that, we can assume Equinor will grow its earnings by 3.3% every year for the next few years.
For Equinor, I’ve compiled three relevant factors you should further examine:
- 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 EQNR 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 EQNR is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of EQNR? 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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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.