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What Are Analysts Saying About Enerplus Corporation's (TSE:ERF) Future?

Simply Wall St

The most recent earnings release Enerplus Corporation's (TSE:ERF) announced in December 2018 signalled that the business gained from a large tailwind, eventuating to a high double-digit earnings growth of 60%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Enerplus's earnings growth outlook over the next few years and whether the future looks even brighter than the past. 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.

See our latest analysis for Enerplus

Analysts' outlook for the upcoming year seems pessimistic, with earnings decreasing by a double-digit -29%. Beyond this, earnings will begin to improve, climbing year on year, and arriving at CA$399m by 2022.

TSX:ERF Past and Future Earnings, April 16th 2019

Even though it is informative knowing the growth rate each year relative to today’s value, it may be more beneficial gauging the rate at which the company is moving on average every year. The benefit of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Enerplus's earnings trajectory over time, which may be more relevant for long term investors. To compute 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 2.2%. This means that, we can assume Enerplus will grow its earnings by 2.2% every year for the next couple of years.

Next Steps:

For Enerplus, I've compiled three important factors you should look at:

  1. 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.
  2. Valuation: What is ERF 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 ERF is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ERF? 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.