The most recent earnings release Crown Holdings, Inc.'s (NYSE:CCK) announced in December 2018 confirmed that the business benefited from a strong tailwind, eventuating to a double-digit earnings growth of 36%. Today I want to provide a brief commentary on how market analysts perceive Crown Holdings's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts' outlook for this coming year seems buoyant, with earnings rising by a robust 46%. This growth seems to continue into the following year with rates arriving at double digit 54% compared to today’s earnings, and finally hitting US$807m by 2022.
While it is useful to be aware of the growth year by year relative to today’s level, it may be more valuable to evaluate the rate at which the business is rising or falling on average every year. The pro of this method is that we can get a better picture of the direction of Crown Holdings's earnings trajectory over the long run, irrespective of near term fluctuations, 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 18%. This means that, we can assume Crown Holdings will grow its earnings by 18% every year for the next few years.
For Crown Holdings, there are three key 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 CCK 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 CCK is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CCK? 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.