Exelon Corporation (NYSE:EXC): Is It A Smart Long Term Opportunity?

Looking at Exelon Corporation’s (NYSE:EXC) earnings update in December 2018, analysts seem extremely confident, with earnings expected to grow by a high double-digit of 51% in the upcoming year, relative to the previous 5-year average growth rate of 12%. With trailing-twelve-month net income at current levels of US$2.0b, we should see this rise to US$3.0b in 2020. Below is a brief commentary around Exelon’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

Check out our latest analysis for Exelon

Exciting times ahead?

Over the next three years, it seems the consensus view of the 12 analysts covering EXC 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 EXC’s earnings growth over these next few years.

NYSE:EXC Past and Future Earnings, April 9th 2019
NYSE:EXC Past and Future Earnings, April 9th 2019

From the current net income level of US$2.0b and the final forecast of US$3.1b by 2022, the annual rate of growth for EXC’s earnings is 6.4%. EPS reaches $3.14 in the final year of forecast compared to the current $2.08 EPS today. With a current profit margin of 5.6%, this movement will result in a margin of 9.9% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Exelon, I’ve put together three relevant factors you should further research:

  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 Exelon 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 Exelon is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Exelon? 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.