What Should We Expect From Odfjell Drilling Ltd.’s (OB:ODL) Earnings Over The Next Few Years?
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The most recent earnings update Odfjell Drilling Ltd.’s (OB:ODL) released in December 2018 signalled that the business faced a substantial headwind with earnings falling by -23%. Today I want to provide a brief commentary on how market analysts view Odfjell Drilling’s earnings growth outlook over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
View our latest analysis for Odfjell Drilling
Market analysts’ consensus outlook for the coming year seems pessimistic, with earnings declining by a double-digit -42%. However, the next few years seem to illustrate a completely different picture, with earnings expected to more than double relative to the most recent earnings level in 2019, reaching US$87m in 2022.
While it’s helpful to understand the growth rate year by year relative to today’s level, it may be more beneficial to determine the rate at which the company is rising or falling on average every year. The advantage of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Odfjell Drilling’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 43%. This means, we can presume Odfjell Drilling will grow its earnings by 43% every year for the next few years.
Next Steps:
For Odfjell Drilling, I’ve compiled three fundamental 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 ODL 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 ODL is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ODL? 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.
