On 30 June 2019, Saracen Mineral Holdings Limited (ASX:SAR) announced its earnings update. Overall, the consensus outlook from analysts appear highly confident, with profits predicted to ramp up by an impressive 93% next year, compared with the historical 5-year average growth rate of 48%. Presently, with latest-twelve-month earnings at AU$92m, we should see this growing to AU$179m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Exciting times ahead?
Longer term expectations from the 6 analysts covering SAR’s stock is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. 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 SAR's earnings growth over these next few years.
By 2022, SAR's earnings should reach AU$196m, from current levels of AU$92m, resulting in an annual growth rate of 20%. This leads to an EPS of A$0.23 in the final year of projections relative to the current EPS of A$0.11. Margins are currently sitting at 17%, which is expected to expand to 25% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Saracen Mineral Holdings, I've compiled three essential factors you should look at:
- Valuation: What is Saracen Mineral Holdings 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 Saracen Mineral Holdings is currently mispriced by the market.
- Future Earnings: How does Saracen Mineral Holdings's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Saracen Mineral Holdings? 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.