The latest earnings release Echo Energy plc's (LON:ECHO) announced in May 2019 indicated that losses became smaller relative to the prior year's level - great news for investors Below is my commentary, albeit very simple and high-level, on how market analysts perceive Echo Energy'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.
View our latest analysis for Echo Energy
Market analysts' prospects for next year seems positive, with earnings becoming less negative, reaching -US$6.8m in 2020. However, this earnings level of -US$6.8m is expected to remain stable over the next three years.
Although it’s helpful to understand the growth year by year relative to today’s figure, it may be more valuable gauging the rate at which the earnings are growing on average every year. The benefit of this method is that we can get a bigger picture of the direction of Echo Energy'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've appended 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 35%. This means that, we can presume Echo Energy will grow its earnings by 35% every year for the next couple of years.
Next Steps:
For Echo Energy, I've compiled three important aspects you should further research:
- 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.
- Future Earnings: How does ECHO's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ECHO? 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.