Looking at Goldcorp Inc’s (TSX:G) earnings update in September 2017, analyst consensus outlook appear pessimistic, with profits predicted to drop by -13.18% next year. Though compared to its 5-year track record of the average earnings growth rate of -34.32%, this is still an improvement. Presently, with earnings at $162.0M, we should see this fall to $140.7M by 2018. Below is a brief commentary on the longer term outlook the market has for G. Investors wanting to learn more about other aspects of Goldcorp should research its fundamentals here. View our latest analysis for Goldcorp
How is G going to perform in the near future?
The view from 17 analysts over the next three years is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. 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.
From the current net income level of $162.0M and the final forecast of $242.2M by 2020, the annual rate of growth for G’s earnings is 17.00%. This results in an EPS of $0.89 in the final year of forecast compared to the current $0.19 EPS today. The main reason for growth is a result of cost cutting activities, as revenues is expected to grow much slower than earnings. With a current profit margin of 4.62%, this movement will result in a margin of 5.34% by 2020.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Goldcorp, there are three important 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 G 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 G is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of G? 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 pass 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.