After PDC Energy, Inc.'s (NASDAQ:PDCE) earnings announcement on 30 June 2019, the consensus outlook from analysts appear pessimistic, as a 13% fall in profits is expected in the upcoming year. However, this is still an improvement on its past 5-year earnings growth rate of -25%, on average. With trailing-twelve-month net income at current levels of US$2.0m, the consensus growth rate suggests that earnings will decline to US$1.8m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
What can we expect from PDC Energy in the longer term?
Longer term expectations from the 11 analysts covering PDCE’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 43% based on the most recent earnings level of US$2.0m to the final forecast of US$6.2m by 2022. EPS reaches $6.43 in the final year of forecast compared to the current $0.031 EPS today. With a current profit margin of 0.2%, this movement will result in a margin of 0.3% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For PDC Energy, I've put together 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 PDC Energy 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 PDC Energy is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of PDC Energy? 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.