3 Companies Growing Earnings Rapidly
Rising earnings can often drive share prices higher. The S&P 500 Index, which is one of the most used benchmarks for the U.S. market, has grown its annual earnings per share (not adjusted for inflation) by about 6.5% every year over the past five years.
As a result, the share price of the benchmark increased by 20.4% over the past five years (it closed at $2,488.65 on April 3) and gained more than 40% until the effects from the coronavirus epidemic started to impact the market.
Past performance is not a guarantee of future results, but it does suggest when a business has or doesn't have a good foundation on which to grow.
Thus, investors may want to consider Republic Services Inc. (NYSE:RSG), Clorox Co. (NYSE:CLX) and Chesapeake Utilities Corp. (NYSE:CPK), as these companies have five-year earnings per share without non-recurring items growth rate of more than 6.5%.
Republic Services
The Phoenix-based waste management company grew its trailing 12-month earnings per share without non-recurring items by a yearly average of 18.1% over the past five full fiscal years. The share price of $72.53 at close on Friday is a result of a nearly 90% rise over the past five years.
The stock has a market capitalization of $23.15 billion, a price-earnings ratio of 21.78 versus the industry median of 16.1 and a price-sales ratio of 2.26 versus the industry median of 1.01.
Wall Street recommends an overweight rating for this stock with an average price target of $92.50 per share. The overweight rating means that the stock is projected to outperform.
GuruFocus assigned a moderate rating of 4 out of 10 for the company's financial strength and a high rating of 8 out of 10 for its profitability.
Clorox
The Oakland, California-based manufacturer and marketer of household, personal and professional products grew its trailing 12-month earnings per share without NRI by an annual average of 8.5% over the past five years. The closing price of $177.54 on April 3 is a result of a 57.2% increase over the past five years.
The stock has a market capitalization of $22.21 billion, a price-earnings ratio of 27.87 versus the industry median of 16.6 and a price-sales ratio of 3.7 compared to the industry median of 0.74.
Wall Street issued a hold rating for the stock with an average price target of $170.92 per share.
GuruFocus assigned the company a moderate financial strength rating of 5 out of 10 and a high profitability rating of 8 out of 10.
Chesapeake Utilities
The Dover, Delaware-based utility company grew its trailing 12-month earnings per share without NRI by an annual average of 9% over the past five full fiscal years. On the tailwind of this, the share price ($78.75 at close on April 3) rose by about 53% over the past five years.
The stock has a market capitalization of $1.29 billion, a price-earnings ratio of 19.92 compared to the industry median of 14.55 and a price-sales ratio of 2.22 versus the industry median of 1.15.
Wall Street recommends an overweight rating for this stock with an average price target of $102 per share.
GuruFocus assigned a low score of 3 out of 10 to the company's financial strength, but a high score of 8 out of 10 to the company's profitability.
Disclosure: I have no positions in any securities mentioned in this article.
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This article first appeared on GuruFocus.
