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What Should You Know About The Future Of Newcrest Mining Limited's (ASX:NCM)?

Simply Wall St

Based on Newcrest Mining Limited's (ASX:NCM) earnings update on 30 June 2019, analysts seem fairly confident, with earnings expected to grow by 34% in the upcoming year, though this is noticeably lower than the previous 5-year average earnings growth of 62%. By 2020, we can expect Newcrest Mining’s bottom line to reach US$749m, a jump from the current trailing-twelve-month of US$561m. Below is a brief commentary around Newcrest Mining's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.

View our latest analysis for Newcrest Mining

Can we expect Newcrest Mining to keep growing?

The longer term view from the 9 analysts covering NCM is one of negative 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 NCM'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.

ASX:NCM Past and Future Earnings, August 16th 2019

This results in an annual growth rate of -6.2% based on the most recent earnings level of US$561m to the final forecast of US$458m by 2022. EPS reaches $0.48 in the final year of forecast compared to the current $0.73 EPS today. Fall in earnings appears to be a result of revenue declining at an average annual rate of -0.3%. By 2022, margins are projected to decline from 15% to 13% as a result in a faster fall in profits.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Newcrest Mining, I've put together three key aspects you should look at:

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