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Cadence Bancorporation (NYSE:CADE): Is It A Smart Long Term Opportunity?

Simply Wall St

Based on Cadence Bancorporation's (NYSE:CADE) earnings update in December 2018, it seems that analyst forecasts are substantially optimistic, as a 62% rise in profits is expected in the upcoming year, relative to the previous 5-year average growth rate of 15%. With trailing-twelve-month net income at current levels of US$166m, we should see this rise to US$269m in 2020. Below is a brief commentary on the longer term outlook the market has for Cadence Bancorporation. For those interested in more of an analysis of the company, you can research its fundamentals here.

View our latest analysis for Cadence Bancorporation

Exciting times ahead?

The view from 7 analysts over the next three years is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of CADE's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:CADE Past and Future Earnings, April 10th 2019

By 2022, CADE's earnings should reach US$327m, from current levels of US$166m, resulting in an annual growth rate of 24%. This leads to an EPS of $2.55 in the final year of projections relative to the current EPS of $1.99. With a current profit margin of 35%, this movement will result in a margin of 37% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Cadence Bancorporation, there are three key 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 Cadence Bancorporation 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 Cadence Bancorporation is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Cadence Bancorporation? 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.