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Woodside Petroleum Ltd (ASX:WPL): Will The Growth Last?

Simply Wall St

Looking at Woodside Petroleum Ltd's (ASX:WPL) earnings update on 30 June 2019, analysts seem cautiously optimistic, with profits predicted to increase by 15% next year against the past 5-year average growth rate of -11%. Presently, with latest-twelve-month earnings at US$1.4b, we should see this growing to US$1.6b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

View our latest analysis for Woodside Petroleum

Can we expect Woodside Petroleum to keep growing?

Longer term expectations from the 11 analysts covering WPL’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of WPL's earnings growth over these next few years.

ASX:WPL Past and Future Earnings, August 16th 2019

From the current net income level of US$1.4b and the final forecast of US$1.9b by 2022, the annual rate of growth for WPL’s earnings is 10%. This leads to an EPS of $1.81 in the final year of projections relative to the current EPS of $1.48. In 2022, WPL's profit margin will have expanded from 26% to 31%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Woodside Petroleum, I've compiled three key aspects 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 Woodside Petroleum 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 Woodside Petroleum is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Woodside Petroleum? 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.