Will Shanta Gold Limited’s (LON:SHG) Earnings Grow In The Years Ahead?
In December 2018, Shanta Gold Limited (LON:SHG) announced its latest earnings update, which indicated that the company experienced a sizeable tailwind, eventuating to a high double-digit earnings growth of 92%. Below, I’ve presented key growth figures on how market analysts view Shanta Gold’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. 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.
View our latest analysis for Shanta Gold
Market analysts’ consensus outlook for the upcoming year seems pessimistic, with earnings reducing by a double-digit -50%. However, the following year seems to show a complete contrast, with earnings expected to grow at a double digit 100% relative to the most recent earnings level in 2019, reaching US$16m, before falling. in 2022.
Although it is informative knowing the rate of growth each year relative to today’s level, it may be more beneficial estimating the rate at which the earnings are growing on average every year. The pro of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Shanta Gold’s earnings trajectory over time, be more volatile. To compute this rate, I’ve appended 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 24%. This means, we can presume Shanta Gold will grow its earnings by 24% every year for the next few years.
Next Steps:
For Shanta Gold, there are three important factors 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 SHG 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 SHG is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SHG? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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