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OZ Minerals Limited (ASX:OZL): Will The Growth Last?

Simply Wall St

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Based on OZ Minerals Limited's (ASX:OZL) earnings update in December 2018, the consensus outlook from analysts appear somewhat bearish, with profits predicted to rise by -16% next year relative to the higher past 5-year average growth rate of 53%. Currently with trailing-twelve-month earnings of AU$222m, we can expect this to reach AU$186m by 2020. Below is a brief commentary on the longer term outlook the market has for OZ Minerals. For those interested in more of an analysis of the company, you can research its fundamentals here.

View our latest analysis for OZ Minerals

How will OZ Minerals perform in the near future?

The longer term view from the 13 analysts covering OZL is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for OZL, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

ASX:OZL Past and Future Earnings, May 1st 2019

By 2022, OZL's earnings should reach AU$320m, from current levels of AU$222m, resulting in an annual growth rate of 9.9%. This leads to an EPS of A$1.05 in the final year of projections relative to the current EPS of A$0.71. In 2022, OZL's profit margin will have expanded from 20% to 21%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For OZ Minerals, there are three pertinent factors you should further research:

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