What Should Investors Know About Archer Limited’s (OB:ARCHER) Earnings Outlook?

Archer Limited’s (OB:ARCHER) latest earnings update in December 2017 suggested that the company finally turned profitable after negative earnings on average over the past few years. Below is my commentary, albeit very simple and high-level, on how market analysts view Archer’s earnings growth trajectory over the next few years and whether the future looks brighter. 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. View our latest analysis for Archer

Analysts’ outlook for the coming year seems pessimistic, with earnings turning into a loss in 2019. However, ARCHER isn’t in the red zone for long, with earnings predicted to bounce bank the following year, generating US$30.84M and eventually climbing to US$35.91M in 2021.

OB:ARCHER Future Profit Apr 23rd 18
OB:ARCHER Future Profit Apr 23rd 18

Even though it’s helpful to understand the growth rate year by year relative to today’s figure, it may be more beneficial estimating the rate at which the business is growing every year, on average. The advantage of this technique is that we can get a better picture of the direction of Archer’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 inserted 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 -21.84%. This means that, we can anticipate Archer will chip away at a rate of -21.84% every year for the next few years.

Next Steps:

For Archer, I’ve compiled three relevant 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 ARCHER 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 ARCHER is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ARCHER? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!