What Should You Know About The Future Of Iluka Resources Limited's (ASX:ILU)?

Iluka Resources Limited's (ASX:ILU) released its most recent earnings update in December 2018, which signalled that the company turned profitable again after experiencing negative earnings in the last financial year. Below, I've laid out key growth figures on how market analysts perceive Iluka Resources's earnings growth outlook over the next couple of 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.

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See our latest analysis for Iluka Resources

Market analysts' consensus outlook for next year seems optimistic, with earnings expanding by a robust 21%. However, earnings is forecasted to fall thereafter, reaching AU$330m in 2022.

Although it is helpful to be aware of the growth year by 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 pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of Iluka Resources's earnings trajectory over time, fluctuate up and down. To compute this rate, I've inserted 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 0.8%. This means, we can assume Iluka Resources will grow its earnings by 0.8% every year for the next couple of years.

Next Steps:

For Iluka Resources, I've compiled three pertinent factors you should further examine:

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 ILU 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 ILU is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ILU? 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 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.