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The latest earnings announcement Craft Brew Alliance, Inc. (NASDAQ:BREW) released in December 2018 showed that the company experienced a substantial headwind with earnings deteriorating by -57%. Below is a brief commentary on my key takeaways on how market analysts predict Craft Brew Alliance's earnings growth trajectory over the next few years and whether the future looks brighter. 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.
Analysts' outlook for next year seems pessimistic, with earnings reducing by a double-digit -11%. However, the next few years seem to illustrate a completely different picture, with expected earnings growth rates reaching double digit 37% compared to today’s level and continues to increase.
While it is informative understanding the rate of growth each year relative to today’s figure, it may be more insightful to determine the rate at which the earnings are growing on average every year. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of Craft Brew Alliance's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've inserted 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 15%. This means, we can presume Craft Brew Alliance will grow its earnings by 15% every year for the next few years.
For Craft Brew Alliance, there are three essential aspects 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 BREW 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 BREW is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BREW? 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 email@example.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.