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Highland Gold Mining Limited (LON:HGM): Will The Growth Last?

Simply Wall St

In December 2018, Highland Gold Mining Limited (LON:HGM) released its earnings update. Generally, it seems that analyst forecasts are fairly optimistic, with profits predicted to increase by 41% next year relative to the past 5-year average growth rate of 27%. By 2020, we can expect Highland Gold Mining’s bottom line to reach US$79m, a jump from the current trailing-twelve-month of US$56m. Below is a brief commentary on the longer term outlook the market has for Highland Gold Mining. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for Highland Gold Mining

Exciting times ahead?

The view from 3 analysts over the next three years is one of 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 understand the overall trajectory of HGM's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

AIM:HGM Past and Future Earnings, August 10th 2019

By 2022, HGM's earnings should reach US$97m, from current levels of US$56m, resulting in an annual growth rate of 10%. EPS reaches $0.27 in the final year of forecast compared to the current $0.15 EPS today. In 2022, HGM's profit margin will have expanded from 18% to 23%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Highland Gold Mining, there are three pertinent factors you should further research:

  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 Highland Gold Mining 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 Highland Gold Mining is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Highland Gold Mining? 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.