Jagged Peak Energy Inc.’s (NYSE:JAG) most recent earnings update in December 2018 indicated that the company finally turned profitable after delivering losses on average over the last few years. Investors may find it useful to understand how market analysts view Jagged Peak Energy’s earnings growth trajectory over the next few years and whether the future looks brighter. 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’ outlook for next year seems pessimistic, with earnings declining by a double-digit -14%. However, the next few years seem to illustrate a completely different picture, with expected earnings growth rates arriving at double digit 29% compared to today’s level and continues to increase.
Even though it’s useful to understand the rate of growth each year relative to today’s figure, it may be more insightful analyzing the rate at which the company is moving every year, on average. The benefit of this technique is that we can get a bigger picture of the direction of Jagged Peak Energy’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve appended 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 16%. This means, we can expect Jagged Peak Energy will grow its earnings by 16% every year for the next couple of years.
For Jagged Peak Energy, there are three relevant 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.
- Future Earnings: How does JAG’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 JAG? 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.