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The most recent earnings announcement OceanaGold Corporation's (TSE:OGC) released in December 2018 indicated that the business endured a significant headwind with earnings declining by -29%. Below is a brief commentary on my key takeaways on how market analysts predict OceanaGold's earnings growth trajectory over the next few years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Market analysts' prospects for next year seems pessimistic, with earnings decreasing by a double-digit -36%. Beyond this, earnings are expected to continue to be below today's level, with a decline of -23% in 2021, eventually reaching US$94m in 2022.
Even though it is informative knowing the rate of growth each year relative to today’s level, it may be more beneficial determining the rate at which the earnings are growing on average every year. The advantage of this technique is that we can get a better picture of the direction of OceanaGold's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. 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 7.8%. This means that, we can presume OceanaGold will grow its earnings by 7.8% every year for the next couple of years.
For OceanaGold, there are three relevant factors you should look at:
- 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 OGC 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 OGC is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of OGC? 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 email@example.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.