Anglo American plc (LON:AAL): What’s The Analyst Consensus Outlook?
The most recent earnings update Anglo American plc’s (LSE:AAL) released in December 2017 indicated that the business benefited from a strong tailwind, eventuating to a high double-digit earnings growth of 98.62%. Today I want to provide a brief commentary on how market analysts view Anglo American’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings. See our latest analysis for Anglo American
Analysts’ expectations for the upcoming year seems positive, with earnings rising by a robust 10.11%. However, the following year seems to show a contrast, with earnings decreasing by -8.86%. This volatility continues into the final year of forecast, with earnings reaching US$2.93B.
Although it is useful to be aware of the growth year by year relative to today’s level, it may be more valuable to gauge the rate at which the earnings are growing every year, on average. The benefit of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Anglo American’s earnings trajectory over time, fluctuate up and down. To calculate this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is -4.43%. This means that, we can anticipate Anglo American will chip away at a rate of -4.43% every year for the next couple of years.
Next Steps:
For Anglo American, there are three important aspects you should further examine:
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 AAL 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 AAL is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of AAL? 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.