WestJet Airlines Ltd (TSE:WJA): What Can We Expect From This High Growth Stock?
In December 2017, WestJet Airlines Ltd (TSX:WJA) announced its most recent earnings update, which showed that the business endured a slight headwind with earnings falling from CA$295.46M to CA$283.58M, a change of -4.02%. Below, I’ve presented key growth figures on how market analysts view WestJet Airlines’s earnings growth outlook over the next couple of 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 WestJet Airlines
Analysts’ expectations for the upcoming year seems pessimistic, with earnings declining by -3.31%. But in the following year, there is a complete contrast in performance, with arriving at double digit 26.57% compared to today’s level and continues to increase to CA$389.76M in 2021.
Even though it is informative knowing the rate of growth each year relative to today’s level, it may be more beneficial analyzing the rate at which the earnings are rising or falling 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 WestJet Airlines’s earnings trajectory over time, 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 11.97%. This means, we can anticipate WestJet Airlines will grow its earnings by 11.97% every year for the next few years.
Next Steps:
For WestJet Airlines, I’ve compiled three fundamental factors 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 WJA 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 WJA is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of WJA? 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.
