Advertisement
Australia markets closed
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • AUD/USD

    0.6487
    -0.0049 (-0.75%)
     
  • ASX 200

    7,896.90
    +77.30 (+0.99%)
     
  • OIL

    81.55
    +0.20 (+0.25%)
     
  • GOLD

    2,215.00
    +2.30 (+0.10%)
     
  • Bitcoin AUD

    108,854.99
    +1,248.89 (+1.16%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     

Will Z Energy Limited’s (NZSE:ZEL) Earnings Grow Over The Next Few Years?

In March 2018, Z Energy Limited (NZSE:ZEL) released its latest earnings announcement, which confirmed that the company gained from a small tailwind, eventuating to a single-digit earnings growth of 8.2%. Below, I’ve laid out key growth figures on how market analysts view Z Energy’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. 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.

Check out our latest analysis for Z Energy

Market analysts’ prospects for the coming year seems pessimistic, with earnings declining by a double-digit -22.1%. Over the medium term, earnings will begin to improve, climbing year on year, and generating NZ$245.7m by 2021.

NZSE:ZEL Future Profit September 3rd 18
NZSE:ZEL Future Profit September 3rd 18

Although it is helpful to be aware of the growth rate each year relative to today’s level, it may be more insightful to estimate the rate at which the earnings are moving on average every year. The benefit of this technique is that we can get a bigger picture of the direction of Z Energy’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is -1.6%. This means, we can expect Z Energy will chip away at a rate of -1.6% every year for the next few years.

Next Steps:

For Z Energy, I’ve compiled three relevant aspects you should further examine:

ADVERTISEMENT
  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 ZEL 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 ZEL is currently mispriced by the market.

  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ZEL? 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.