Yahoo Finance What Are Analysts Saying About Rio Tinto Group's (LON:RIO) Future?
Rio Tinto Group's (LON:RIO) released its most recent earnings update in December 2018, which confirmed that the business experienced a strong tailwind, leading to a high double-digit earnings growth of 56%. Investors may find it useful to understand how market analysts predict Rio Tinto Group's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
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See our latest analysis for Rio Tinto Group
Market analysts' prospects for the upcoming year seems pessimistic, with earnings declining by a double-digit -24%. In the next couple of years, earnings should continue to be below today's level, with a decline of -38% in 2021, eventually reaching US$8.4b in 2022.
Although it is useful to understand the rate of growth year by year relative to today’s figure, it may be more valuable determining the rate at which the earnings are growing every year, on average. The pro of this method is that we can get a bigger picture of the direction of Rio Tinto Group's earnings trajectory over the long run, irrespective of near term fluctuations, fluctuate up and down. 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 -12%. This means that, we can expect Rio Tinto Group will chip away at a rate of -12% every year for the next couple of years.
Next Steps:
For Rio Tinto Group, I've compiled three essential 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 RIO 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 RIO is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of RIO? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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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.
