Yahoo Finance What Should Investors Know About Coca-Cola Amatil Limited's (ASX:CCL) Future?
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The latest earnings update Coca-Cola Amatil Limited (ASX:CCL) released in December 2018 confirmed that the company endured a minor headwind with earnings deteriorating from AU$445m to AU$402m, a change of -9.7%. Below, I've laid out key growth figures on how market analysts perceive Coca-Cola Amatil's earnings growth trajectory 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.
Check out our latest analysis for Coca-Cola Amatil
Market analysts' consensus outlook for the coming year seems pessimistic, with earnings reducing by -8.8%. Beyond this, earnings are predicted to continue to be below today's level, with a reduction of -2.7% in 2021, eventually reaching AU$391m in 2022.
Although it’s useful to understand the growth rate year by year relative to today’s value, it may be more insightful to evaluate the rate at which the earnings are moving on average every year. The benefit of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Coca-Cola Amatil's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put 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 1.3%. This means that, we can assume Coca-Cola Amatil will grow its earnings by 1.3% every year for the next couple of years.
Next Steps:
For Coca-Cola Amatil, I've put together three important 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 CCL 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 CCL is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CCL? 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.
