Will Cineplex Inc.'s (TSE:CGX) Earnings Grow In Next 12 Months?
After Cineplex Inc.'s (TSE:CGX) recent earnings announcement in December 2018, analyst consensus outlook seem pessimistic, with earnings expected to decline by -14% in the upcoming year. However, this pessimism is not unsubstantiated given the negative earnings growth rate over the past five years on average. Presently, with latest-twelve-month earnings at CA$77m, we should see this fall to CA$66m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Cineplex in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
See our latest analysis for Cineplex
Can we expect Cineplex to keep growing?
The longer term expectations from the 11 analysts of CGX is tilted towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of CGX's earnings growth over these next few years.
By 2022, CGX's earnings should reach CA$74m, from current levels of CA$77m, resulting in an annual growth rate of 1.8%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of CA$1.17 in the final year of forecast compared to the current CA$1.22 EPS today. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 4.8% to 4.0% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Cineplex, I've compiled three key factors you should look at:
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 Cineplex 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 Cineplex is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Cineplex? 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.
