In December 2018, Murphy Oil Corporation ( NYSE:MUR ) announced its latest earnings update, which showed that the business turned profitable again after experiencing losses in the previous financial year. Below, I’ve laid out key growth figures on how market analysts predict Murphy Oil’s earnings growth outlook over the next couple of 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.
Market analysts’ prospects for the coming year seems pessimistic, with earnings decreasing by a double-digit -37%. Over the medium term, earnings will begin to improve, climbing year on year, and generating US$508m by 2022.
While it’s helpful to understand the growth each year relative to today’s level, it may be more valuable to evaluate the rate at which the earnings are moving on average every year. The pro of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Murphy Oil’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 6.5%. This means that, we can expect Murphy Oil will grow its earnings by 6.5% every year for the next couple of years.
For Murphy Oil, there are three key factors you should further research:
- 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 MUR 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 MUR is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of MUR? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at email@example.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.