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What Should Investors Know About Yancoal Australia Ltd's (ASX:YAL) Growth?

Simply Wall St

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Yancoal Australia Ltd's (ASX:YAL) announced its latest earnings update in December 2018, which confirmed that the company gained from a major tailwind, more than doubling its earnings from the prior year. Below, I've presented key growth figures on how market analysts view Yancoal Australia'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.

View our latest analysis for Yancoal Australia

Market analysts' prospects for the upcoming year seems pessimistic, with earnings reducing by a double-digit -14%. Over the medium term, earnings should continue to be below today's level, with a decline of -23% in 2021, eventually reaching AU$658m in 2022.

ASX:YAL Past and Future Earnings, May 2nd 2019

Although it’s useful to understand the rate of growth each year relative to today’s value, it may be more valuable determining the rate at which the earnings are rising or falling on average every year. The pro of this method is that we can get a bigger picture of the direction of Yancoal Australia's earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To calculate this rate, I've appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is -14%. This means, we can anticipate Yancoal Australia will chip away at a rate of -14% every year for the next couple of years.

Next Steps:

For Yancoal Australia, I've put together three essential 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 YAL 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 YAL is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of YAL? 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.