Yahoo Finance Will Caltex Australia Limited's (ASX:CTX) Earnings Grow In The Next Couple Of Years?
Caltex Australia Limited's (ASX:CTX) most recent earnings announcement in December 2018 confirmed that the business faced a minor headwind with earnings falling from AU$619m to AU$560m, a change of -9.5%. Investors may find it useful to understand how market analysts view Caltex Australia's earnings growth outlook over the next couple of years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
View our latest analysis for Caltex Australia
Analysts' expectations for the upcoming year seems pessimistic, with earnings reducing by a double-digit -12%. However, the next few years show a contrast, with earnings growth becoming positive in 2021, with the bottom line increasing to AU$580m in 2022.
Although it is useful to be aware of the growth rate year by year relative to today’s figure, it may be more valuable estimating the rate at which the earnings are moving on average every year. The benefit of this approach is that we can get a better picture of the direction of Caltex Australia's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I've inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 2.6%. This means, we can anticipate Caltex Australia will grow its earnings by 2.6% every year for the next couple of years.
Next Steps:
For Caltex Australia, I've compiled three pertinent 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 CTX 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 CTX is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CTX? 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.
