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What Do Analysts Think About Royal Dutch Shell plc's (AMS:RDSA) Growth?

As Royal Dutch Shell plc (AMS:RDSA) released its earnings announcement on 31 December 2018, the consensus outlook from analysts appear somewhat bearish, as a -4.7% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 6.7%. Currently with trailing-twelve-month earnings of US$23b, we can expect this to reach US$22b by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Royal Dutch Shell in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

Check out our latest analysis for Royal Dutch Shell

Exciting times ahead?

The longer term view from the 23 analysts covering RDSA is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around 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 RDSA's earnings growth over these next few years.

ENXTAM:RDSA Past and Future Earnings, April 11th 2019
ENXTAM:RDSA Past and Future Earnings, April 11th 2019

This results in an annual growth rate of 3.8% based on the most recent earnings level of US$23b to the final forecast of US$25b by 2022. This leads to an EPS of $3.06 in the final year of projections relative to the current EPS of $2.82. With a current profit margin of 6.0%, this movement will result in a margin of 7.0% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Royal Dutch Shell, I've put together three important aspects you should further research:

  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 Royal Dutch Shell 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 Royal Dutch Shell is currently mispriced by the market.

  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Royal Dutch Shell? 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 editorial-team@simplywallst.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.

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