Inter Pipeline Ltd (TSE:IPL): Immense Growth Potential?
Based on Inter Pipeline Ltd’s (TSX:IPL) earnings update in December 2017, analyst forecasts seem fairly subdued, with profits predicted to rise by 13.87% next year against the higher past 5-year average growth rate of 15.85%. Presently, with earnings at CA$526.70M, we should see this growing to CA$599.75M by 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here. See our latest analysis for Inter Pipeline
How is Inter Pipeline going to perform in the near future?
The longer term expectations from the 9 analysts of IPL is tilted towards the negative sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for IPL, 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.
By 2021, IPL’s earnings should reach CA$426.43M, from current levels of CA$526.70M, resulting in an annual growth rate of -0.73%. EPS reaches CA$1.04 in the final year of forecast compared to the current CA$1.41 EPS today. The bottom-line decline seems to be caused by cost growth exceeding top-line growth of 0.21% in the next three years. Furthermore, the current 23.30% margin is expected to contract to 18.94% by the end of 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Inter Pipeline, I’ve put together three important factors 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 Inter Pipeline 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 Inter Pipeline is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Inter Pipeline? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
