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Looking at Matador Resources Company's (NYSE:MTDR) earnings update in March 2019, analyst consensus outlook appear bearish, with earnings expected to decline by 11% in the upcoming year against the past 5-year average growth rate of 29%. Currently with a trailing-twelve-month profit of US$274m, the consensus growth rate suggests that earnings will drop to US$243m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Matador Resources in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How will Matador Resources perform in the near future?
Over the next three years, it seems the consensus view of the 12 analysts covering MTDR is skewed towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for MTDR, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of US$274m and the final forecast of US$418m by 2022, the annual rate of growth for MTDR’s earnings is 23%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of $2.17 in the final year of forecast compared to the current $2.41 EPS today. However, the expansion of the current 36% margin is not expected to be sustained, as it begins to contract to 30% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Matador Resources, I've put together three pertinent factors you should look at:
- 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.
- Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for Matador Resources's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Matador Resources? 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.