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Cimarex Energy Co. (NYSE:XEC): Immense Growth Potential?

Simply Wall St

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In March 2019, Cimarex Energy Co. (NYSE:XEC) released its earnings update. Generally, it seems that analyst expectations are fairly bearish, with profits predicted to rise by 2.6% next year relative to the higher past 5-year average growth rate of 22%. By 2020, we can expect Cimarex Energy’s bottom line to reach US$801m, a jump from the current trailing-twelve-month of US$781m. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Cimarex Energy in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

View our latest analysis for Cimarex Energy

Exciting times ahead?

The 18 analysts covering XEC 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 XEC, 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:XEC Past and Future Earnings, June 24th 2019

By 2022, XEC's earnings should reach US$1.1b, from current levels of US$781m, resulting in an annual growth rate of 16%. EPS reaches $8.6 in the final year of forecast compared to the current $8.32 EPS today. With a current profit margin of 33%, 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 Cimarex Energy, there are three pertinent aspects you should further research:

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