The latest earnings announcement Ameren Corporation (NYSE:AEE) released in December 2018 signalled that the business experienced a sizeable tailwind, leading to a high double-digit earnings growth of 56%. Investors may find it useful to understand how market analysts view Ameren’s earnings growth outlook 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.
Analysts’ expectations for the coming year seems pessimistic, with earnings falling by -0.3%. But in the following year, there is a complete contrast in performance, with generating double digit 8.7% compared to today’s level and continues to increase to US$976m in 2022.
Even though it’s helpful to be aware of the growth year by year relative to today’s level, it may be more insightful estimating the rate at which the company is growing on average every year. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of Ameren’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put 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 6.3%. This means that, we can anticipate Ameren will grow its earnings by 6.3% every year for the next couple of years.
For Ameren, I’ve put together three essential factors 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.
- Future Earnings: How does AEE’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 AEE? 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.