How Do Analysts See Kirkland Lake Gold Ltd (TSX:KL) Performing In The Year Ahead?
In September 2017, Kirkland Lake Gold Ltd (TSX:KL) announced its latest earnings update. Overall, analysts seem extremely confident, with earnings expected to more than double in the upcoming year, against the historical 5-year average growth rate of 18.84%. By 2018, we can expect KL’s bottom line to reach $93M, a jump from the current $42M. Below is a brief commentary on the longer term outlook the market has for KL. Investors wanting to learn more about other aspects of Kirkland Lake Gold should research its fundamentals here. View our latest analysis for Kirkland Lake Gold
How will Kirkland Lake Gold perform in the near future?
The longer term expectations from the 9 analysts of KL is tilted towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 24.46% based on the most recent earnings level of $42M to the final forecast of $102M by 2020. This leads to an EPS of $1.05 in the final year of projections relative to the current EPS of $0.35. Earnings growth appears to be a result of cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. With a current profit margin of 10.35%, this movement will result in a margin of 19.18% by 2020.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Kirkland Lake Gold, I’ve put together three key factors you should further examine:
1. 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.
2. Valuation: What is KL 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 KL is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of KL? 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.
