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What Should Investors Know About The Future Of Highland Gold Mining Limited’s (LON:HGM)?

Lacy Summers

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In June 2018, Highland Gold Mining Limited (LON:HGM) released its earnings update. Generally, analysts seem fairly confident, as a 4.5% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of 3.3%. By 2020, we can expect Highland Gold Mining’s bottom line to reach US$68m, a jump from the current trailing-twelve-month of US$65m. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for Highland Gold Mining

Can we expect Highland Gold Mining to keep growing?

The longer term expectations from the 3 analysts of HGM is tilted 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 HGM, 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.

AIM:HGM Future Profit February 6th 19

This results in an annual growth rate of 25% based on the most recent earnings level of US$65m to the final forecast of US$117m by 2022. This leads to an EPS of $0.33 in the final year of projections relative to the current EPS of $0.20. With a current profit margin of 21%, this movement will result in a margin of 23% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Highland Gold Mining, I’ve compiled three important aspects 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!

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 editorial-team@simplywallst.com.