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Compass Minerals International, Inc. (NYSE:CMP): Poised For Long-Term Success?

Simply Wall St

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The most recent earnings announcement Compass Minerals International, Inc.'s (NYSE:CMP) released in December 2018 indicated that the company gained from a strong tailwind, leading to a high double-digit earnings growth of 62%. Today I want to provide a brief commentary on how market analysts perceive Compass Minerals International's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

Check out our latest analysis for Compass Minerals International

Market analysts' consensus outlook for next year seems optimistic, with earnings rising by a robust 22%. This growth in earnings is expected to continue at an exponential rate, bringing the bottom line up to US$157m by 2022.

NYSE:CMP Past and Future Earnings, April 3rd 2019

Even though it’s informative knowing the rate of growth year by year relative to today’s figure, it may be more valuable analyzing the rate at which the company is moving on average every year. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Compass Minerals International'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 30%. This means, we can presume Compass Minerals International will grow its earnings by 30% every year for the next few years.

Next Steps:

For Compass Minerals International, I've put together three key aspects you should look at:

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