Looking at Beach Energy Limited's (ASX:BPT) recent earnings update on 30 June 2019, analyst forecasts appear to be pessimistic, with profits predicted to drop by 4.2% next year against the past 5-year average growth rate of 51%. With trailing-twelve-month net income at current levels of AU$577m, the consensus growth rate suggests that earnings will decline to AU$553m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
How will Beach Energy perform in the near future?
The longer term expectations from the 10 analysts of BPT is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2022, BPT's earnings should reach AU$653m, from current levels of AU$577m, resulting in an annual growth rate of 4.1%. EPS reaches A$0.29 in the final year of forecast compared to the current A$0.25 EPS today. In 2022, BPT's profit margin will have expanded from 28% to 29%.
Future outlook is only one aspect when you're building an investment case for a stock. For Beach Energy, I've put together three essential factors you should look at:
- Valuation: What is Beach Energy 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 Beach Energy is currently mispriced by the market.
- Future Earnings: How does Beach Energy'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 Beach Energy? 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 firstname.lastname@example.org. 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.