On 31 December 2018, Newcrest Mining Limited (ASX:NCM) released its earnings update. Generally, analysts seem extremely confident, with earnings expected to grow by a high double-digit of 71% in the upcoming year, which is within range of the past five-year average earnings growth of 78%. Presently, with latest-twelve-month earnings at US$202m, we should see this growing to US$345m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
How is Newcrest Mining going to perform in the near future?
The longer term expectations from the 15 analysts of NCM is tilted towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of NCM’s earnings growth over these next few years.
By 2022, NCM’s earnings should reach US$338m, from current levels of US$202m, resulting in an annual growth rate of 1.8%. This leads to an EPS of $0.75 in the final year of projections relative to the current EPS of $0.26. In 2022, NCM’s profit margin will have expanded from 5.7% to 9.3%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Newcrest Mining, I’ve put together three fundamental 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 Newcrest Mining 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 Newcrest Mining is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Newcrest Mining? 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.