In December 2018, Continental Building Products, Inc. (NYSE:CBPX) released its most recent earnings announcement, which showed that the company benefited from a robust tailwind, eventuating to a double-digit earnings growth of 24%. Today I want to provide a brief commentary on how market analysts perceive Continental Building Products’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts’ consensus outlook for this coming year seems rather subdued, with earnings growing by a single digit 4.3%. The following years do not look much more exciting, with earnings reaching US$79m before declining in 2022.
Although it is helpful to be aware of the growth each year relative to today’s value, it may be more beneficial to evaluate the rate at which the earnings are moving every year, on average. The benefit of this method is that we can get a better picture of the direction of Continental Building Products’s earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. 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 2.9%. This means that, we can anticipate Continental Building Products will grow its earnings by 2.9% every year for the next few years.
For Continental Building Products, there are three fundamental factors 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 CBPX 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 CBPX is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CBPX? 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 email@example.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.