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What Should Investors Know About CTT – Correios De Portugal, S.A.’s (ELI:CTT) Earnings Trajectory?

Ajay Mannan

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CTT – Correios De Portugal, S.A.’s (ELI:CTT) latest earnings update in December 2018 suggested that the company endured a major headwind with earnings falling by -28%. Below is a brief commentary on my key takeaways on how market analysts view CTT – Correios De Portugal’s earnings growth trajectory over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

View our latest analysis for CTT – Correios De Portugal

Analysts’ outlook for this coming year seems positive, with earnings increasing by a robust 40%. This growth seems to continue into the following year with rates arriving at double digit 86% compared to today’s earnings, and finally hitting €60m by 2022.

ENXTLS:CTT Past and Future Earnings, February 25th 2019

Even though it’s useful to understand the growth rate each year relative to today’s value, it may be more insightful to evaluate the rate at which the business is rising or falling on average every year. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of CTT – Correios De Portugal’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 30%. This means that, we can assume CTT – Correios De Portugal will grow its earnings by 30% every year for the next few years.

Next Steps:

For CTT – Correios De Portugal, I’ve put together three relevant factors you should further research:

  1. 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.
  2. Valuation: What is CTT 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 CTT is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CTT? 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 editorial-team@simplywallst.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.