Looking at Bathurst Resources Limited's (ASX:BRL) recent earnings update on 30 June 2019, analyst forecasts appear to be pessimistic, as a 17% fall in profits is expected in the upcoming year compared with the past 5-year average growth rate of 86%. With trailing-twelve-month net income at current levels of NZ$45m, the consensus growth rate suggests that earnings will decline to NZ$37m by 2020. Below is a brief commentary on the longer term outlook the market has for Bathurst Resources. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for Bathurst Resources

Exciting times ahead?

Over the next three years, it seems the consensus view of the 2 analysts covering BRL is skewed towards the 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.

From the current net income level of NZ$45m and the final forecast of NZ$54m by 2022, the annual rate of growth for BRL’s earnings is 4.6%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of NZ$0.028 in the final year of forecast compared to the current NZ$0.028 EPS today. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 85% to 56% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Bathurst Resources, I've put together three relevant 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 Bathurst 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 Bathurst Resources is currently mispriced by the market.

3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Bathurst 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.