In December 2018, Consolidated Edison, Inc. (NYSE:ED) released its latest earnings announcement, which indicated that the company experienced a slight headwind with earnings declining from US$1.5b to US$1.4b, a change of -9.4%. Today I want to provide a brief commentary on how market analysts view Consolidated Edison's earnings growth outlook over the next couple of years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts' expectations for the coming year seems rather muted, with earnings increasing by a single digit 6.3%. The growth outlook in the following year seems much more optimistic with rates reaching double digit 15% compared to today’s earnings, and finally hitting US$1.6b by 2022.
Even though it’s informative understanding the rate of growth each year relative to today’s level, it may be more insightful to determine the rate at which the earnings are growing on average every year. The benefit of this technique is that we can get a better picture of the direction of Consolidated Edison's earnings trajectory over the long run, irrespective of near term fluctuations, 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 5.9%. This means that, we can anticipate Consolidated Edison will grow its earnings by 5.9% every year for the next couple of years.
For Consolidated Edison, I've put together three important aspects 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.
- Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for ED's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ED? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.