In June 2018, Franco-Nevada Corporation (TSE:FNV) released its earnings update. Generally, analyst consensus outlook appear cautiously subdued, with earnings expected to grow by 7.1% in the upcoming year compared with the higher past 5-year average growth rate of 37%. Currently with trailing-twelve-month earnings of US$222m, we can expect this to reach US$238m by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Franco-Nevada in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Exciting times ahead?
The view from 11 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 get an idea of the overall earnings growth trend for FNV, 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.
By 2021, FNV’s earnings should reach US$241m, from current levels of US$195m, resulting in an annual growth rate of 7.5%. This leads to an EPS of $1.53 in the final year of projections relative to the current EPS of $1.06. The bottom-line growth seems to be caused by cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. In 2021, FNV’s profit margin will have expanded from 29% to 29%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Franco-Nevada, I’ve put together three key aspects you should further research:
- 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.
- Valuation: What is Franco-Nevada 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 Franco-Nevada is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Franco-Nevada? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.