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The New Zealand Refining Company Limited (NZSE:NZR): What Are The Future Prospects?

Simply Wall St

After The New Zealand Refining Company Limited's (NZSE:NZR) earnings announcement in December 2018, analysts seem fairly confident, as a 27% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of 15%. Presently, with latest-twelve-month earnings at NZ$30m, we should see this growing to NZ$38m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for New Zealand Refining

Exciting times ahead?

Over the next three years, it seems the consensus view of the 3 analysts covering NZR is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for NZR, 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.

NZSE:NZR Past and Future Earnings, August 12th 2019

This results in an annual growth rate of 29% based on the most recent earnings level of NZ$30m to the final forecast of NZ$73m by 2022. EPS reaches NZ$0.23 in the final year of forecast compared to the current NZ$0.095 EPS today. In 2022, NZR's profit margin will have expanded from 8.2% to 17%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For New Zealand Refining, I've put together three essential factors you should further examine:

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