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Griffin Mining Limited's (LON:GFM) latest earnings announcement in June 2019 revealed that the business faced a significant headwind with earnings declining by -41%. Below is a brief commentary on my key takeaways on how market analysts view Griffin Mining's earnings growth outlook over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts' prospects for next year seems pessimistic, with earnings reducing 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.
While it is helpful to be aware of the rate of growth each year relative to today’s value, it may be more insightful to gauge the rate at which the earnings are rising or falling every year, on average. The advantage of this technique is that we can get a better 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 calculate 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 29%. This means that, we can assume Griffin Mining will grow its earnings by 29% every year for the next couple of years.
For Griffin Mining, there are three key factors 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 firstname.lastname@example.org. 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.