Based on California Water Service Group’s (NYSE:CWT) earnings update in June 2018, analyst consensus outlook appear cautiously optimistic, with profits predicted to increase by 12% next year relative to the past 5-year average growth rate of 5.4%. Currently with trailing-twelve-month earnings of US$58m, we can expect this to reach US$65m by 2019. 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.
How is California Water Service Group going to perform in the near future?
The view from 5 analysts over the next three years is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for CWT, 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, CWT’s earnings should reach US$101m, from current levels of US$67m, resulting in an annual growth rate of 13%. This leads to an EPS of $1.72 in the final year of projections relative to the current EPS of $1.4. The bottom-line growth seems to be caused by cost cutting activities, as revenues is expected to grow much slower than earnings. With a current profit margin of 10%, this movement will result in a margin of 13% by 2021.
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 important 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.
- Future Earnings: How does California Water Service Group’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- 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!
To help readers see past 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. For errors that warrant correction please contact the editor at email@example.com.