In December 2018, Canadian Natural Resources Limited (TSE:CNQ) announced its latest earnings update, which suggested that the company experienced a slight tailwind, leading to a single-digit earnings growth of 8.1%. Below, I've laid out key growth figures on how market analysts predict Canadian Natural Resources's earnings growth trajectory over the next couple of 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.
Market analysts' consensus outlook for the coming year seems rather muted, with earnings rising by a single digit 1.6%. The growth outlook in the following year seems much more positive with rates generating double digit 26% compared to today’s earnings, and finally hitting CA$4.4b by 2022.
Although it is helpful to understand the growth year by year relative to today’s value, it may be more valuable evaluating the rate at which the company is rising or falling on average every year. The benefit of this method is that we can get a bigger picture of the direction of Canadian Natural Resources'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'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 15%. This means, we can expect Canadian Natural Resources will grow its earnings by 15% every year for the next few years.
For Canadian Natural Resources, there are three essential aspects you should further research:
- 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 CNQ 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 CNQ is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CNQ? 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 firstname.lastname@example.org. 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.