Yahoo Finance What Should We Expect From Centrica plc’s (LON:CNA) Earnings In The Next 12 Months?
Based on Centrica plc’s (LON:CNA) earnings update in June 2018, analysts seem fairly confident, as a 27.0% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of -12.4%. With trailing-twelve-month net income at current levels of UK£529.0m, we should see this rise to UK£672.1m in 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Centrica in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
View our latest analysis for Centrica
How will Centrica perform in the near future?
Over the next three years, it seems the consensus view of the 18 analysts covering CNA is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of CNA’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of UK£333.0m and the final forecast of UK£536.2m by 2021, the annual rate of growth for CNA’s earnings is 11.4%. This leads to an EPS of £0.14 in the final year of projections relative to the current EPS of £0.060. Growth in earnings appears to be a result of cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. With a current profit margin of 1.2%, this movement will result in a margin of 1.9% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Centrica, I’ve put together three essential aspects 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 Centrica 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 Centrica is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Centrica? 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.
