Mineral Resources Limited’s (ASX:MIN) latest earnings update in June 2018 indicated that the business benefited from a strong tailwind, eventuating to a double-digit earnings growth of 35%. Below, I’ve presented key growth figures on how market analysts predict Mineral Resources’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts’ expectations for this coming year seems rather muted, with earnings increasing by a single digit 6.4%. The growth outlook in the following year seems much more positive with rates reaching double digit 30% compared to today’s earnings, and finally hitting AU$371m by 2022.
Although it is useful to understand the growth each year relative to today’s value, it may be more valuable to analyze the rate at which the earnings are growing on average every year. The pro of this method is that it ignores near term flucuations and accounts for the overarching direction of Mineral Resources’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 11%. This means, we can anticipate Mineral Resources will grow its earnings by 11% every year for the next couple of years.
For Mineral Resources, I’ve put together three key aspects 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.
- Valuation: What is MIN 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 MIN is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MIN? 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 email@example.com.