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Seven Generations Energy Ltd. (TSE:VII): Are Analysts Bull Or Bear?

Simply Wall St

The most recent earnings update Seven Generations Energy Ltd.'s (TSE:VII) released in December 2018 signalled that the company faced a substantial headwind with earnings declining by -22%. Below, I've presented key growth figures on how market analysts view Seven Generations Energy's earnings growth trajectory over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

See our latest analysis for Seven Generations Energy

Market analysts' prospects for next year seems rather muted, with earnings growing by a single digit 1.6%. However, the following year seems to show a contrast, with earnings reducing by -11%. This volatility continues into the final year of forecast, with earnings arriving at CA$314m.

TSX:VII Past and Future Earnings, April 23rd 2019

Although it’s helpful to understand the growth rate year by year relative to today’s level, it may be more valuable analyzing the rate at which the business is moving every year, on average. The pro of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Seven Generations Energy's earnings trajectory over time, fluctuate up and down. To calculate this rate, I put 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 -9.1%. This means, we can assume Seven Generations Energy will chip away at a rate of -9.1% every year for the next couple of years.

Next Steps:

For Seven Generations Energy, 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 VII 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 VII is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of VII? 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.