Nexa Resources S.A. (NYSE:NEXA): What Does The Future Look Like?

Looking at Nexa Resources S.A.’s (NYSE:NEXA) earnings update in December 2018, analysts seem cautiously optimistic, as a 29% increase in profits is expected in the upcoming year, though this is evidently lower than the historical 5-year average earnings growth of 52%. With trailing-twelve-month net income at current levels of US$75m, we should see this rise to US$96m in 2020. Below is a brief commentary around Nexa Resources’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.

See our latest analysis for Nexa Resources

How will Nexa Resources perform in the near future?

The view from 8 analysts over the next three years 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 reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NYSE:NEXA Past and Future Earnings, March 26th 2019
NYSE:NEXA Past and Future Earnings, March 26th 2019

By 2022, NEXA’s earnings should reach US$119m, from current levels of US$75m, resulting in an annual growth rate of 16%. This leads to an EPS of $0.90 in the final year of projections relative to the current EPS of $0.56. Margins are currently sitting at 3.0%, which is expected to expand to 5.0% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Nexa Resources, I’ve put together three essential aspects 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 Nexa Resources 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 Nexa Resources is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Nexa Resources? 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 editorial-team@simplywallst.com. 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.