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Looking at CIT Group Inc.’s (NYSE:CIT) earnings update on 31 December 2018, analysts seem fairly confident, as a 2.3% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of -31%. Presently, with latest-twelve-month earnings at US$453m, we should see this growing to US$464m by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for CIT Group in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Can we expect CIT Group to keep growing?
The view from 6 analysts over the next three years is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around 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.
From the current net income level of US$453m and the final forecast of US$478m by 2022, the annual rate of growth for CIT’s earnings is 2.7%. This leads to an EPS of $6.21 in the final year of projections relative to the current EPS of $3.85. With a current profit margin of 20%, this movement will result in a margin of 25% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For CIT Group, I’ve put together three pertinent factors you should further examine:
- 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 CIT Group 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 CIT Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of CIT Group? 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 email@example.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. On rare occasion, data errors may occur. Thank you for reading.