Yahoo Finance Will Fortescue Metals Group Limited’s (ASX:FMG) Earnings Grow In The Year Ahead?
Since Fortescue Metals Group Limited (ASX:FMG) released its earnings in June 2018, it seems that analyst forecasts are fairly optimistic, with earnings expected to grow by 8.6% in the upcoming year against the past 5-year average growth rate of -4.0%. With trailing-twelve-month net income at current levels of US$879.0m, we should see this rise to US$954.5m in 2019. 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 Fortescue Metals Group
What can we expect from Fortescue Metals Group in the longer term?
The 14 analysts covering FMG view its longer term outlook with a 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 reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 9.3% based on the most recent earnings level of US$879.0m to the final forecast of US$1.20b by 2021. EPS reaches $0.37 in the final year of forecast compared to the current $0.28 EPS today. The bottom-line growth seems to be caused by reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. Margins is currently sitting at 12.8%, which is expected to expand to 16.1% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Fortescue Metals Group, there are three essential aspects 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 Fortescue Metals Group 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 Fortescue Metals Group is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Fortescue Metals Group? 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.
