Yahoo Finance Will Ausdrill Limited’s (ASX:ASL) Earnings Grow Over The Next Few Years?
Ausdrill Limited’s (ASX:ASL) announced its latest earnings update in June 2018, which suggested that the business gained from a large tailwind, eventuating to a high double-digit earnings growth of 91.8%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Ausdrill’s earnings growth outlook over the next few 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.
Check out our latest analysis for Ausdrill
Analysts’ expectations for the upcoming year seems rather muted, with earnings climbing by a single digit 3.0%. The growth outlook in the following year seems much more positive with rates arriving at double digit 98.0% compared to today’s earnings, and finally hitting AU$139.8m by 2021.
Although it’s helpful to be aware of the rate of growth each year relative to today’s level, it may be more insightful estimating the rate at which the business is growing on average every year. The pro of this technique is that we can get a bigger picture of the direction of Ausdrill’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 the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 30.4%. This means, we can expect Ausdrill will grow its earnings by 30.4% every year for the next couple of years.
Next Steps:
For Ausdrill, I’ve put together three essential 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 ASL 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 ASL is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ASL? 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.
