CBS Corporation's (NYSE:CBS) announced its latest earnings update in December 2018, which signalled that the business gained from a strong tailwind, leading to a double-digit earnings growth of 50%. Below, I've presented key growth figures on how market analysts view CBS's earnings growth outlook 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.
Analysts' outlook for the coming year seems rather muted, with earnings rising by a single digit 7.7%. The growth outlook in the following year seems much more positive with rates arriving at double digit 21% compared to today’s earnings, and finally hitting US$2.5b by 2022.
Although it’s helpful to be aware of the growth rate each year relative to today’s figure, it may be more beneficial gauging the rate at which the company is rising or falling every year, on average. The advantage of this approach is that we can get a better picture of the direction of CBS's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate 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 8.0%. This means that, we can anticipate CBS will grow its earnings by 8.0% every year for the next few years.
For CBS, I've compiled three fundamental 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 CBS 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 CBS is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CBS? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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