FAR Limited’s (ASX:FAR) announced its latest earnings update in December 2017, which revealed company earnings became less negative compared to the previous year’s level – great news for investors Below, I’ve presented key growth figures on how market analysts perceive FAR’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. View out our latest analysis for FAR
Market analysts’ consensus outlook for next year seems optimistic, with earnings becoming less negative, arriving at -AU$18.50m in 2019. However, earnings should fall off and remain stable over the next few years, reaching -AU$7.99m in 2021.
Even though it is useful to be aware of the rate of growth each year relative to today’s level, it may be more insightful to estimate the rate at which the business is growing on average every year. The benefit of this method is that we can get a bigger picture of the direction of FAR’s earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To compute 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 76.87%. This means that, we can anticipate FAR will grow its earnings by 76.87% every year for the next couple of years.
For FAR, there are three relevant factors you should further research:
- 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.
- Management:Have insiders been ramping up their shares to take advantage of the market’s sentiment for FAR’s future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of FAR? 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.