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LyondellBasell Industries N.V. (NYSE:LYB): What Does The Future Look Like?

Simply Wall St

Looking at LyondellBasell Industries N.V.'s (NYSE:LYB) earnings update in December 2018, analyst forecasts seem pessimistic, with earnings expected to decline by -17% in the upcoming year relative to the past 5-year average growth rate of 4.6%. With trailing-twelve-month net income at current levels of US$4.7b, the consensus growth rate suggests that earnings will decline to US$3.9b by 2020. Below is a brief commentary around LyondellBasell Industries'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 LyondellBasell Industries

How is LyondellBasell Industries going to perform in the near future?

Longer term expectations from the 16 analysts covering LYB’s stock is one of positive 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 LYB'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.

NYSE:LYB Past and Future Earnings, April 19th 2019

By 2022, LYB's earnings should reach US$4.4b, from current levels of US$4.7b, resulting in an annual growth rate of 0.9%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of $12.01 in the final year of forecast compared to the current $12.06 EPS today. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 12% to 10% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For LyondellBasell Industries, I've compiled three important factors 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 LyondellBasell Industries 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 LyondellBasell Industries is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of LyondellBasell Industries? 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.