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Cabot Oil & Gas Corporation (NYSE:COG): Is It A Smart Long Term Opportunity?

Simply Wall St

As Cabot Oil & Gas Corporation (NYSE:COG) released its earnings announcement on 31 December 2018, it seems that analyst forecasts are fairly optimistic, with earnings expected to grow by 47% in the upcoming year against the past 5-year average growth rate of -9.3%. Currently with trailing-twelve-month earnings of US$557m, we can expect this to reach US$818m by 2020. Below is a brief commentary on the longer term outlook the market has for Cabot Oil & Gas. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

View our latest analysis for Cabot Oil & Gas

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How will Cabot Oil & Gas perform in the near future?

The 19 analysts covering COG view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for COG, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

NYSE:COG Past and Future Earnings, March 23rd 2019

From the current net income level of US$557m and the final forecast of US$801m by 2022, the annual rate of growth for COG’s earnings is 9.9%. This leads to an EPS of $1.83 in the final year of projections relative to the current EPS of $1.25. With a current profit margin of 26%, this movement will result in a margin of 32% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Cabot Oil & Gas, I’ve compiled three pertinent factors you should further examine:

  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 Cabot Oil & Gas 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 Cabot Oil & Gas is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Cabot Oil & Gas? 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.