Career Education Corporation's (NASDAQ:CECO) most recent earnings announcement in December 2018 showed that the business finally turned profitable after losses on average over the last few years. Below is a brief commentary on my key takeaways on how market analysts view Career Education's earnings growth outlook over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts' outlook for next year seems positive, with earnings increasing by a robust 46%. This growth seems to continue into the following year with rates reaching double digit 63% compared to today’s earnings, and finally hitting US$99m by 2022.
Although it’s informative knowing the growth rate year by year relative to today’s figure, it may be more insightful to evaluate the rate at which the business is growing on average every year. The pro of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Career Education'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 19%. This means, we can presume Career Education will grow its earnings by 19% every year for the next few years.
For Career Education, I've compiled three pertinent aspects you should further research:
- 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 CECO 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 CECO is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CECO? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.