After California Water Service Group's (NYSE:CWT) earnings announcement in December 2018, analyst consensus outlook appear cautiously subdued, with profits predicted to rise by 3.3% next year compared with the higher past 5-year average growth rate of 6.2%. Presently, with latest-twelve-month earnings at US$66m, we should see this growing to US$68m by 2020. Below is a brief commentary around California Water Service Group's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Can we expect California Water Service Group to keep growing?
The 6 analysts covering CWT view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of US$66m and the final forecast of US$84m by 2022, the annual rate of growth for CWT’s earnings is 8.9%. EPS reaches $1.72 in the final year of forecast compared to the current $1.36 EPS today. In 2022, CWT's profit margin will have expanded from 9.4% to 11%.
Future outlook is only one aspect when you're building an investment case for a stock. For California Water Service Group, I've put together three fundamental factors you should further examine:
- 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.
- Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for California Water Service Group's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of California Water Service Group? 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.