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In June 2018, Galaxy Resources Limited (ASX:GXY) released its earnings update. Generally, it seems that analyst forecasts are fairly pessimistic, as a -5.8% fall in profits is expected in the upcoming year against the past 5-year average growth rate of 60%. With trailing-twelve-month net income at current levels of US$130k, the consensus growth rate suggests that earnings will decline to US$122k by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Galaxy Resources in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
View our latest analysis for Galaxy Resources
Exciting times ahead?
The 9 analysts covering GXY view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of GXY’s earnings growth over these next few years.
By 2022, GXY’s earnings should reach US$308k, from current levels of US$130k, resulting in an annual growth rate of 34%. EPS reaches $0.098 in the final year of forecast compared to the current $0.00033 EPS today. In 2022, GXY’s profit margin will have expanded from 0.1% to 0.3%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Galaxy Resources, there are three important factors you should look at:
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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.
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Future Earnings: How does Galaxy Resources’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Galaxy 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!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.