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Gran Tierra Energy Inc. (NYSEMKT:GTE): What Are The Future Prospects?

Simply Wall St

In December 2018, Gran Tierra Energy Inc. (NYSEMKT:GTE) announced its earnings update. Overall, it seems that analyst forecasts are fairly optimistic, with profits predicted to increase by 8.9% next year compared with the past 5-year average growth rate of -8.1%. Currently with trailing-twelve-month earnings of US$103m, we can expect this to reach US$112m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

View our latest analysis for Gran Tierra Energy

How will Gran Tierra Energy perform in the near future?

Over the next three years, it seems the consensus view of the 4 analysts covering GTE is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for GTE, 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.

AMEX:GTE Past and Future Earnings, April 22nd 2019

This results in an annual growth rate of 1.1% based on the most recent earnings level of US$103m to the final forecast of US$103m by 2022. This leads to an EPS of $0.29 in the final year of projections relative to the current EPS of $0.26. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 17% to 11% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Gran Tierra Energy, I've put together three essential factors 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 Gran Tierra 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 Gran Tierra Energy is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Gran Tierra 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 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.