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On 31 March 2019, Franco-Nevada Corporation (TSE:FNV) announced its earnings update. Overall, analyst consensus outlook appear vastly optimistic, with profits predicted to ramp up by an impressive 83% next year, against the past 5-year average growth rate of 33%. With trailing-twelve-month net income at current levels of US$139m, we should see this rise to US$255m in 2020. Below is a brief commentary on the longer term outlook the market has for Franco-Nevada. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
What can we expect from Franco-Nevada in the longer term?
The 11 analysts covering FNV view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for FNV, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 11% based on the most recent earnings level of US$139m to the final forecast of US$301m by 2022. EPS reaches $1.61 in the final year of forecast compared to the current $0.75 EPS today. With a current profit margin of 21%, this movement will result in a margin of 35% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Franco-Nevada, I've compiled three important aspects 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.
- Valuation: What is Franco-Nevada 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 Franco-Nevada is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Franco-Nevada? 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 email@example.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.