Lithium Americas Corp’s (TSX:LAC) released its most recent earnings update in December 2017, which showed company earnings became less negative compared to the previous year’s level as a result of recent tailwinds Below, I’ve presented key growth figures on how market analysts perceive Lithium Americas’s earnings growth outlook over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. View our latest analysis for Lithium Americas
Analysts’ expectations for next year seems optimistic, with earnings becoming less negative, reaching -US$14.86M in 2019. However, earnings are expected to fall off and remain flat over the next few years, arriving at -US$28.75M in 2021.
Although it’s helpful to understand the rate of growth year by year relative to today’s figure, it may be more beneficial to estimate the rate at which the company is rising or falling on average every year. The pro of this approach is that we can get a bigger picture of the direction of Lithium Americas’s earnings trajectory over the long run, irrespective of near term fluctuations, fluctuate up and down. To calculate this rate, I’ve inserted 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 23.32%. This means, we can anticipate Lithium Americas will grow its earnings by 23.32% every year for the next couple of years.
For Lithium Americas, there are three important factors 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.
- Management:Have insiders been ramping up their shares to take advantage of the market’s sentiment for LAC’s future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of LAC? 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 pass 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.