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WPX Energy, Inc. (NYSE:WPX): Will The Growth Last?

Simply Wall St

Looking at WPX Energy, Inc.'s (NYSE:WPX) earnings update in December 2018, it seems that analyst expectations are fairly bearish, as a -37% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 29%. Currently with trailing-twelve-month earnings of US$234m, we can expect this to reach US$148m by 2020. Below is a brief commentary around WPX Energy's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

View our latest analysis for WPX Energy

What can we expect from WPX Energy in the longer term?

Over the next three years, it seems the consensus view of the 20 analysts covering WPX is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NYSE:WPX Past and Future Earnings, April 21st 2019

By 2022, WPX's earnings should reach US$440m, from current levels of US$234m, resulting in an annual growth rate of 21%. EPS reaches $1.04 in the final year of forecast compared to the current $0.57 EPS today. With a current profit margin of 10%, this movement will result in a margin of 14% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For WPX Energy, I've put together three key aspects you should further research:

  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 WPX Energy 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 WPX Energy is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of WPX Energy? 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 editorial-team@simplywallst.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.