Compass Minerals International, Inc. (NYSE:CMP): Poised For Long-Term Success?

The most recent earnings announcement Compass Minerals International, Inc.’s (NYSE:CMP) released in December 2018 signalled that the company benefited from a sizeable tailwind, leading to a high double-digit earnings growth of 62%. Investors may find it useful to understand how market analysts view Compass Minerals International’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

View our latest analysis for Compass Minerals International

Analysts’ outlook for this coming year seems positive, with earnings climbing by a robust 21%. This growth in earnings is expected to continue at an exponential rate, bringing the bottom line up to US$157m by 2022.

NYSE:CMP Past and Future Earnings, March 15th 2019
NYSE:CMP Past and Future Earnings, March 15th 2019

While it is informative understanding the growth rate year by year relative to today’s level, it may be more beneficial analyzing the rate at which the earnings are growing every year, on average. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of Compass Minerals International’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve inserted 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 30%. This means, we can assume Compass Minerals International will grow its earnings by 30% every year for the next few years.

Next Steps:

For Compass Minerals International, I’ve put together three essential factors 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 CMP 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 CMP is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CMP? 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 editorial-team@simplywallst.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.