Based on Meridian Energy Limited’s (NZSE:MEL) earnings update in December 2018, analysts seem fairly confident, as a 26% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of -3.4%. Currently with trailing-twelve-month earnings of NZ$201m, we can expect this to reach NZ$254m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
What can we expect from Meridian Energy in the longer term?
Longer term expectations from the 6 analysts covering MEL’s stock is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for MEL, 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.
From the current net income level of NZ$201m and the final forecast of NZ$270m by 2022, the annual rate of growth for MEL’s earnings is 4.1%. EPS reaches NZ$0.12 in the final year of forecast compared to the current NZ$0.078 EPS today. In 2022, MEL’s profit margin will have expanded from 7.3% to 10.0%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Meridian Energy, I’ve compiled three pertinent factors 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 Meridian Energy 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 Meridian Energy is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Meridian Energy? 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.