California Resources Corporation’s (NYSE:CRC) latest earnings announcement in December 2017 showed difficult times for the company, with earnings reversing into losses as a result of recent headwinds. Below is a brief commentary on my key takeaways on how market analysts perceive California Resources’s earnings growth outlook over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. See our latest analysis for California Resources
Market analysts’ consensus outlook for the coming year seems positive, with earnings becoming less negative, arriving at -US$86.51M in 2019. However, earnings are predicted to fall off and remain stable over the next few years, generating -US$131.49M in 2021.
Although it’s useful to understand the rate of growth year by year relative to today’s value, it may be more beneficial to estimate the rate at which the business is moving every year, on average. The advantage of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of California Resources’s earnings trajectory over time, fluctuate up and down. To calculate this rate, I put 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 31.82%. This means that, we can expect California Resources will grow its earnings by 31.82% every year for the next couple of years.
For California Resources, I’ve put together three pertinent 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 CRC 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 CRC is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CRC? 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 pass 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.