In September 2018, SRC Energy Inc. (NYSEMKT:SRCI) released its earnings update. Generally, analyst consensus outlook appear cautiously optimistic, with profits predicted to increase by 32% next year compared with the past 5-year average growth rate of 11%. Presently, with latest-twelve-month earnings at US$142m, we should see this growing to US$188m by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for SRC Energy in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Can we expect SRC Energy to keep growing?
The longer term expectations from the 14 analysts of SRCI is tilted 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 SRCI’s earnings growth over these next few years.
This results in an annual growth rate of 16% based on the most recent earnings level of US$142m to the final forecast of US$202m by 2021. This leads to an EPS of $1.25 in the final year of projections relative to the current EPS of $0.69. However, the near term margins may change heading into 2021, from the current levels of 44% to 41%.
Future outlook is only one aspect when you’re building an investment case for a stock. For SRC 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 SRC 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 SRC Energy is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SRC 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!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.