Denbury Resources Inc.’s (NYSE:DNR) latest earnings update in December 2018 showed that the company benefited from a sizeable tailwind, eventuating to a high double-digit earnings growth of 98%. Below is a brief commentary on my key takeaways on how market analysts view Denbury Resources’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts’ consensus outlook for this coming year seems optimistic, with earnings expanding by a robust 15%. However, earnings is expected to fall slightly in the following year before rising again to US$378m in 2022.
Although it’s useful to be aware of the rate of growth year by year relative to today’s figure, it may be more valuable to estimate the rate at which the business is growing every year, on average. The advantage of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Denbury Resources’s earnings trajectory over time, be more volatile. 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 15%. This means that, we can anticipate Denbury Resources will grow its earnings by 15% every year for the next few years.
For Denbury Resources, I’ve compiled three fundamental factors 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.
- Future Earnings: How does DNR’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 DNR? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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