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Evolution Mining Limited (ASX:EVN): Is It A Good Long Term Opportunity?

The latest earnings release Evolution Mining Limited’s (ASX:EVN) announced in June 2018 confirmed that the business gained from a robust tailwind, leading to a double-digit earnings growth of 21%. Below, I’ve laid out key growth figures on how market analysts perceive Evolution Mining’s earnings growth outlook 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.

Check out our latest analysis for Evolution Mining

Market analysts’ consensus outlook for next year seems pessimistic, with earnings reducing by a double-digit -13%. However, the next few years seem to illustrate a completely different picture, with expected earnings growth rates generating double digit 17% compared to today’s level and continues to increase.

ASX:EVN Future Profit October 31st 18

Even though it’s helpful to be aware of the growth each year relative to today’s level, it may be more beneficial to estimate the rate at which the earnings are growing every year, on average. The pro of this approach is that it ignores near term flucuations and accounts for the overarching direction of Evolution Mining’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 9.8%. This means, we can anticipate Evolution Mining will grow its earnings by 9.8% every year for the next few years.

Next Steps:

For Evolution Mining, there are three relevant aspects you should further examine:

  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 EVN 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 EVN is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of EVN? 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.