Yahoo Finance What Should We Expect From Fortescue Metals Group Limited’s (ASX:FMG) Earnings In The Next Couple Of Years?
In June 2018, Fortescue Metals Group Limited (ASX:FMG) released its latest earnings announcement, which showed that the business experienced a substantial headwind with earnings falling by -58%. Below, I’ve laid out key numbers on how market analysts view Fortescue Metals Group’s earnings growth trajectory over the next couple of years and whether the future looks brighter. 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.
See our latest analysis for Fortescue Metals Group
Market analysts’ consensus outlook for the coming year seems optimistic, with earnings growing by a robust 11%. This growth seems to continue into the following year with rates reaching double digit 19% compared to today’s earnings, and finally hitting US$1.2b by 2021.
Although it’s helpful to be aware of the growth rate each year relative to today’s value, it may be more valuable gauging the rate at which the business is growing every year, on average. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of Fortescue Metals Group’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve inserted 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 8.0%. This means that, we can anticipate Fortescue Metals Group will grow its earnings by 8.0% every year for the next couple of years.
Next Steps:
For Fortescue Metals Group, I’ve compiled three key factors you should further research:
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 FMG 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 FMG is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of FMG? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
