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Will Spectra Energy Partners LP’s (NYSE:SEP) Earnings Grow In The Years Ahead?

Brandon Murphy

The latest earnings update Spectra Energy Partners LP’s (NYSE:SEP) released in December 2017 indicated that the business faced a major headwind with earnings deteriorating by -71.76%. Below, I’ve presented key growth figures on how market analysts perceive Spectra Energy Partners’s earnings growth outlook over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. Check out our latest analysis for Spectra Energy Partners

Analysts’ expectations for the upcoming year seems positive, with earnings growth more than doubling. Earnings continue to grow strongly in the next couple of years, finally arriving at US$1.51B in 2021.

NYSE:SEP Future Profit Apr 18th 18

Even though it’s informative knowing the rate of growth each year relative to today’s figure, it may be more valuable gauging the rate at which the earnings are growing on average every year. The advantage of this method is that we can get a better picture of the direction of Spectra Energy Partners’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 analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 23.73%. This means that, we can assume Spectra Energy Partners will grow its earnings by 23.73% every year for the next few years.

Next Steps:

For Spectra Energy Partners, there are three fundamental aspects you should further examine:

  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 SEP 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 SEP is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SEP? 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.