Yahoo Finance Will Caltex Australia Limited's (ASX:CTX) Earnings Grow In Next 12 Months?
Since Caltex Australia Limited (ASX:CTX) released its earnings in December 2018, analyst forecasts seem bearish, as a 12% fall in profits is expected in the upcoming year compared with the past 5-year average growth rate of 15%. Presently, with latest-twelve-month earnings at AU$560m, we should see this fall to AU$495m by 2020. Below is a brief commentary on the longer term outlook the market has for Caltex Australia. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
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See our latest analysis for Caltex Australia
Exciting times ahead?
Over the next three years, it seems the consensus view of the 11 analysts covering CTX is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of CTX's earnings growth over these next few years.
From the current net income level of AU$560m and the final forecast of AU$583m by 2022, the annual rate of growth for CTX’s earnings is 2.7%. This leads to an EPS of A$2.3 in the final year of projections relative to the current EPS of A$2.15. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 2.6% to 2.4% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Caltex Australia, there are three relevant aspects 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 Caltex Australia 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 Caltex Australia is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Caltex Australia? 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.
