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Century Communities, Inc.’s (NYSE:CCS) latest earnings update in December 2018 suggested that the business benefited from a large tailwind, leading to a high double-digit earnings growth of 93%. Today I want to provide a brief commentary on how market analysts predict Century Communities’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts’ prospects for next year seems rather muted, with earnings growing by a single digit 1.0%. The growth outlook in the following year seems much more optimistic with rates arriving at double digit 24% compared to today’s earnings, and finally hitting US$165m by 2022.
Even though it’s informative knowing the growth each year relative to today’s value, it may be more insightful evaluating the rate at which the business is moving on average every year. The advantage of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Century Communities’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve appended 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 15%. This means, we can expect Century Communities will grow its earnings by 15% every year for the next few years.
For Century Communities, I’ve compiled three pertinent aspects 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 CCS 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 CCS is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CCS? 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 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.