Yahoo Finance What Should You Know About Contact Energy Limited's (NZSE:CEN) Future?
As Contact Energy Limited (NZSE:CEN) announced its recent earnings release on 30 June 2019, it seems that analyst forecasts are fairly pessimistic, as a 6.2% fall in profits is expected in the upcoming year against the past 5-year average growth rate of 1.9%. Presently, with latest-twelve-month earnings at NZ$170m, we should see this fall to NZ$159m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Contact Energy in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
See our latest analysis for Contact Energy
How is Contact Energy going to perform in the near future?
The view from 6 analysts over the next three years is one of 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 CEN'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 NZ$170m and the final forecast of NZ$177m by 2022, the annual rate of growth for CEN’s earnings is 5.2%. EPS reaches NZ$0.25 in the final year of forecast compared to the current NZ$0.24 EPS today. Margins are currently sitting at 6.9%, which is expected to expand to 7.8% by 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Contact Energy, there are three essential 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 Contact Energy 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 Contact Energy is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Contact Energy? 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 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.
