Looking at WPX Energy, Inc.’s (NYSE:WPX) earnings update in December 2018, it seems that analyst expectations are fairly bearish, with profits predicted to rise by -40% next year relative to the higher past 5-year average growth rate of 29%. Currently with trailing-twelve-month earnings of US$234m, we can expect this to reach US$141m by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for WPX Energy in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
How will WPX Energy perform in the near future?
The longer term view from the 21 analysts covering WPX 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.
This results in an annual growth rate of 21% based on the most recent earnings level of US$234m to the final forecast of US$452m by 2022. This leads to an EPS of $1.06 in the final year of projections relative to the current EPS of $0.57. Margins are currently sitting at 10%, which is expected to expand to 14% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For WPX Energy, I’ve compiled three key aspects 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 WPX Energy 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 WPX Energy is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of WPX Energy? 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. Thank you for reading.