In December 2018, Eland Oil & Gas PLC (LON:ELA) released its latest earnings announcement, which confirmed that the company experienced a major tailwind, more than doubling its earnings from the prior year. Investors may find it useful to understand how market analysts view Eland Oil & Gas’s earnings growth trajectory over the next couple of 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.
Analysts’ expectations for this coming year seems buoyant, with earnings expanding by a robust 47%. This growth seems to continue into the following year with rates reaching double digit 89% compared to today’s earnings and falls to US$66m by 2022.
Although it is helpful to be aware of the rate of growth each year relative to today’s value, it may be more valuable to estimate the rate at which the company is moving on average every year. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of Eland Oil & Gas’s earnings trajectory over time, fluctuate up and down. To compute this rate, I put 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 5.0%. This means, we can anticipate Eland Oil & Gas will grow its earnings by 5.0% every year for the next few years.
For Eland Oil & Gas, there are three relevant aspects 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 ELA 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 ELA is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ELA? 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.