Stock Analysis

What Are Analysts Expecting From Encana Corporation (TSE:ECA) In Next 12 Months?

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In December 2017, Encana Corporation (TSX:ECA) released its most recent earnings update. Generally, analyst consensus outlook seem bearish, with earnings expected to decline by -38.99% in the upcoming year compared with the past 5-year average growth rate of 0.17%. Presently, with earnings at US$827.00M, we should see this fall to US$504.55M by 2019. Below is a brief commentary on the longer term outlook the market has for Encana. For those interested in more of an analysis of the company, you can research its fundamentals here. View our latest analysis for Encana

What can we expect from Encana in the longer term?

Over the next three years, it seems the consensus view of the 12 analysts covering ECA is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. 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 ECA's earnings growth over these next few years.
TSX:ECA Future Profit Mar 10th 18
TSX:ECA Future Profit Mar 10th 18
By 2021, ECA's earnings should reach US$1.05B, from current levels of US$827.00M, resulting in an annual growth rate of 12.62%. EPS reaches $1.57 in the final year of forecast compared to the current $0.85 EPS today. The main reason for growth is a result of reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. However, the near term margin expansion is expected to shrink heading into 2021, from the current levels of 20.88% to 17.11%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Encana, there are three key aspects you should further examine:

  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 Encana 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 Encana is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Encana? 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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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.