Anadarko Petroleum Corporation (NYSE:APC): Will The Growth Last?
As Anadarko Petroleum Corporation (NYSE:APC) released its earnings announcement on 30 September 2018, analysts seem cautiously optimistic, with profits predicted to increase by 19% next year compared with the past 5-year average growth rate of 6.7%. By 2019, we can expect Anadarko Petroleum’s bottom line to reach -US$552.2m, a jump from the current trailing-twelve-month -US$464.0m. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Check out our latest analysis for Anadarko Petroleum
Can we expect Anadarko Petroleum to keep growing?
The longer term view from the 24 analysts covering APC is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for APC, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of -US$464.0m and the final forecast of -US$989.0m by 2021, the annual rate of growth for APC’s earnings is 28%. This leads to an EPS of $6.92 in the final year of projections relative to the current EPS of $-0.85. The primary reason for earnings growth is due to cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. With a current profit margin of -4.2%, this movement will result in a margin of -6.4% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Anadarko Petroleum, 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 Anadarko Petroleum 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 Anadarko Petroleum is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Anadarko Petroleum? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
