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Boliden AB (STO:BOL): Are Analysts’ Earnings Forecast Signalling Trouble Ahead?

Simply Wall St

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In December 2018, Boliden AB (STO:BOL) released its latest earnings announcement, which confirmed that the business gained from a slight tailwind, eventuating to a single-digit earnings growth of 5.0%. Below is a brief commentary on my key takeaways on how market analysts view Boliden's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

See our latest analysis for Boliden

Market analysts' prospects for next year seems pessimistic, with earnings reducing by a double-digit -18%. Beyond this, earnings are expected to continue to be below today's level, with a decline of -18% in 2021, eventually reaching kr5.9b in 2022.

OM:BOL Past and Future Earnings, April 1st 2019

Even though it is helpful to be aware of the growth year by year relative to today’s level, it may be more insightful to evaluate the rate at which the company is rising or falling every year, on average. The advantage of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Boliden's earnings trajectory over time, be more volatile. To calculate this rate, I put 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 -8.0%. This means, we can assume Boliden will chip away at a rate of -8.0% every year for the next couple of years.

Next Steps:

For Boliden, there are three key factors 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 BOL 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 BOL is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BOL? 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.