On 31 December 2018, Kirkland Lake Gold Ltd. (TSE:KL) released its earnings update. Generally, analyst consensus outlook appear vastly optimistic, as a 68% rise in profits is expected in the upcoming year, similar to the range of average earnings growth for the past five years of 66% per year. By 2020, we can expect Kirkland Lake Gold’s bottom line to reach US$460m, a jump from the current trailing-twelve-month of US$274m. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Exciting times ahead?
Longer term expectations from the 12 analysts covering KL’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of KL’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 10% based on the most recent earnings level of US$274m to the final forecast of US$516m by 2022. This leads to an EPS of $2.07 in the final year of projections relative to the current EPS of $1.3. In 2022, KL’s profit margin will have expanded from 30% to 37%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Kirkland Lake Gold, I’ve put together three fundamental aspects 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 Kirkland Lake Gold 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 Kirkland Lake Gold is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Kirkland Lake Gold? 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.