Looking at Boliden AB’s (STO:BOL) recent earnings update on 31 December 2018, analyst forecasts seem pessimistic, with profits predicted to drop by -20% next year compared with the past 5-year average growth rate of 36%. With trailing-twelve-month net income at current levels of kr7.2b, the consensus growth rate suggests that earnings will decline to kr5.8b by 2020. Below is a brief commentary around Boliden’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
What can we expect from Boliden in the longer term?
The longer term expectations from the 14 analysts of BOL is tilted towards the negative sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for BOL, 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.
By 2022, BOL’s earnings should reach kr5.7b, from current levels of kr7.2b, resulting in an annual growth rate of -8.1%. This leads to an EPS of SEK22.69 in the final year of projections relative to the current EPS of SEK26.32. The primary reason for earnings contraction is due to revenue declining at an average annual rate of -0.2%. With earnings declining at a faster rate over time, margins is expected to contract from 14% to 11% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Boliden, I’ve compiled 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 Boliden 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 Boliden is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Boliden? 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.