Yahoo Finance What Should You Know About Capital Power Corporation's (TSE:CPX) Earnings Trajectory?
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
The latest earnings update Capital Power Corporation (TSE:CPX) released in December 2018 indicated that the business benefited from a major tailwind, more than doubling its earnings from the prior year. Today I want to provide a brief commentary on how market analysts view Capital Power's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Check out our latest analysis for Capital Power
Market analysts' consensus outlook for the coming year seems pessimistic, with earnings falling by -1.7%. In the next couple of years, earnings are expected to continue to be below today's level, with a decrease of -24% in 2021, eventually reaching CA$177m in 2022.
Even though it is informative understanding the growth each year relative to today’s value, it may be more beneficial to determine the rate at which the earnings are growing on average every year. The benefit of this technique is that we can get a bigger picture of the direction of Capital Power's earnings trajectory over the long run, irrespective of near term fluctuations, fluctuate up and down. To calculate this rate, I've appended 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 -9.7%. This means, we can expect Capital Power will chip away at a rate of -9.7% every year for the next couple of years.
Next Steps:
For Capital Power, I've put together three key 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 CPX 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 CPX is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CPX? 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.
