Yahoo Finance Meridian Energy Limited (NZSE:MEL): Will The Growth Last?
In June 2018, Meridian Energy Limited (NZSE:MEL) announced its earnings update. Overall, it seems that analyst forecasts are fairly optimistic, with profits predicted to increase by 24.4% next year relative to the past 5-year average growth rate of -1.3%. Currently with trailing-twelve-month earnings of NZ$201.0m, we can expect this to reach NZ$250.1m by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Meridian Energy in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
View our latest analysis for Meridian Energy
Exciting times ahead?
The longer term expectations from the 6 analysts of MEL is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. 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.
This results in an annual growth rate of 10.4% based on the most recent earnings level of NZ$201.0m to the final forecast of NZ$282.6m by 2021. This leads to an EPS of NZ$0.11 in the final year of projections relative to the current EPS of NZ$0.078. Growth in earnings appears to be a result of cost cutting activities, as revenues is expected to grow much slower than earnings. Margins is currently sitting at 7.3%, which is expected to expand to 10.1% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Meridian Energy, I’ve put together three relevant factors you should further examine:
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!
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.
