In June 2018, Nexa Resources SA (NYSE:NEXA) announced its earnings update. Overall, it seems that analyst forecasts are substantially optimistic, with profits predicted to ramp up by an impressive 73.0% next year, in-line with the past five-year average earnings growth of 67.9% per year. Presently, with latest-twelve-month earnings at US$96.6m, we should see this growing to US$167.1m by 2019. Below is a brief commentary on the longer term outlook the market has for Nexa Resources. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How will Nexa Resources perform in the near future?
The 6 analysts covering NEXA view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2021, NEXA’s earnings should reach US$233.6m, from current levels of US$126.9m, resulting in an annual growth rate of 10.9%. This leads to an EPS of $1.33 in the final year of projections relative to the current EPS of $1.09. The primary reason for earnings growth is due to reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. In 2021, NEXA’s profit margin will have expanded from 5.2% to 10.8%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Nexa Resources, I’ve put together three relevant aspects you should further examine:
- 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 Nexa Resources 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 Nexa Resources is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Nexa Resources? 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.