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In June 2019, Griffin Mining Limited (LON:GFM) announced its most recent earnings update, which suggested that the company endured a substantial headwind with earnings falling by -41%. Today I want to provide a brief commentary on how market analysts predict Griffin Mining's earnings growth outlook over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts' consensus outlook for the upcoming year seems pessimistic, with earnings decreasing by a double-digit -35%. However, the next few years seem to illustrate a completely different picture, with expected earnings growth rates reaching double digit 27% compared to today’s level and continues to increase.
Even though it is informative understanding the growth each year relative to today’s figure, it may be more insightful estimating the rate at which the business is moving every year, on average. The advantage of this technique is that we can get a bigger picture of the direction of Griffin Mining's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I put 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 29%. This means, we can anticipate Griffin Mining will grow its earnings by 29% every year for the next few years.
For Griffin Mining, I've compiled three key aspects you should look at:
- 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 GFM 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 GFM is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of GFM? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.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.