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Cadence Bancorporation's (NYSE:CADE) most recent earnings update in December 2018 indicated that the company experienced a sizeable tailwind, leading to a high double-digit earnings growth of 62%. Today I want to provide a brief commentary on how market analysts perceive Cadence Bancorporation's earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts' consensus outlook for the coming year seems positive, with earnings growing by a significant 62%. This high growth in earnings is expected to continue, bringing the bottom line up to US$327m by 2022.
While it’s useful to understand the growth year by year relative to today’s figure, it may be more valuable estimating the rate at which the business is moving on average every year. The pro of this method is that it ignores near term flucuations and accounts for the overarching direction of Cadence Bancorporation's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put 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 24%. This means, we can expect Cadence Bancorporation will grow its earnings by 24% every year for the next few years.
For Cadence Bancorporation, I've put together three important factors you should look at:
- 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 CADE 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 CADE is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CADE? 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 firstname.lastname@example.org. 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.