What Should Investors Know About Centamin plc’s (LON:CEY) Future?

Looking at Centamin plc’s (LON:CEY) earnings update in March 2018, analyst forecasts seem pessimistic, with earnings expected to decline by -9.08% in the upcoming year. However, this pessimism is not unfounded, given the negative past 5-year average earnings growth of -8.87%. Presently, with latest-twelve-month earnings at US$132.42m, we should see this fall to US$120.39m by 2019. Below is a brief commentary on the longer term outlook the market has for Centamin. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

View our latest analysis for Centamin

Can we expect Centamin to keep growing?

The 12 analysts covering CEY view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for CEY, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
LSE:CEY Future Profit August 1st 18
LSE:CEY Future Profit August 1st 18
By 2021, CEY’s earnings should reach US$116.66m, from current levels of US$109.40m, resulting in an annual growth rate of 7.16%. EPS reaches $0.12 in the final year of forecast compared to the current $0.095 EPS today. The main reason for growth is a result of reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. However, the expansion of the current 16.20% margin is not expected to be sustained, as it begins to contract to 15.25% by the end of 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Centamin, I’ve compiled three key 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 Centamin 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 Centamin is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Centamin? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.