The most recent earnings update Aker BP ASA’s (OB:AKERBP) released in December 2018 confirmed that the company benefited from a sizeable tailwind, leading to a high double-digit earnings growth of 73%. Below, I’ve laid out key numbers on how market analysts predict Aker BP’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Market analysts’ consensus outlook for the coming year seems rather subdued, with earnings increasing by a single digit 3.6%. The growth outlook in the following year seems much more buoyant with rates arriving at double digit 57% compared to today’s earnings, and finally hitting US$859m by 2022.
Even though it’s informative understanding the growth each year relative to today’s value, it may be more insightful to estimate the rate at which the business is moving every year, on average. The advantage of this technique is that we can get a bigger picture of the direction of Aker BP’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 17%. This means, we can presume Aker BP will grow its earnings by 17% every year for the next couple of years.
For Aker BP, 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 AKERBP 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 AKERBP is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of AKERBP? 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.