What Should You Know About Exco Technologies Limited’s (TSE:XTC) Long Term Outlook?
Exco Technologies Limited’s (TSX:XTC) released its most recent earnings update in September 2017, which indicated that the company endured a major headwind with earnings declining by -10.59%. Below, I’ve laid out key growth figures on how market analysts perceive Exco Technologies’s earnings growth outlook over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. Check out our latest analysis for Exco Technologies
Market analysts’ prospects for this coming year seems rather muted, with earnings climbing by a single digit 1.76%. The growth outlook in the following year seems much more buoyant with rates reaching double digit 15.87% compared to today’s earnings, and finally hitting CA$55.9M by 2021.
Even though it’s helpful to understand the growth rate year by year relative to today’s level, it may be more valuable estimating the rate at which the business is growing on average every year. The advantage of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Exco Technologies’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve inserted 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 7.48%. This means, we can anticipate Exco Technologies will grow its earnings by 7.48% every year for the next couple of years.
Next Steps:
For Exco Technologies, there are three important factors you should look at:
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 XTC 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 XTC is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of XTC? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
