Yahoo Finance What Should We Expect From Oil Search Limited’s (ASX:OSH) Earnings Over The Next Year?
Looking at Oil Search Limited’s (ASX:OSH) earnings update in June 2018, analysts seem highly optimistic, with a bottom line expansion of more than 100% in the upcoming year, compared with the historical 5-year average growth rate of -6.6%. With trailing-twelve-month net income at current levels of US$302m, we should see this rise to US$627m in 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
View our latest analysis for Oil Search
Exciting times ahead?
The longer term expectations from the 13 analysts of OSH is tilted towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of OSH’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 16% based on the most recent earnings level of US$302m to the final forecast of US$718m by 2021. EPS reaches $0.39 in the final year of forecast compared to the current $0.20 EPS today. The primary reason for earnings growth is due to cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. In 2021, OSH’s profit margin will have expanded from 21% to 34%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Oil Search, I’ve put together three key 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 Oil Search 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 Oil Search is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Oil Search? 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.
