Caltex Australia Limited’s (ASX:CTX) announced its latest earnings update in December 2017, which signalled that the company benefited from a slight tailwind, leading to a single-digit earnings growth of 1.50%. Below, I’ve laid out key growth figures on how market analysts view Caltex Australia’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts’ expectations for the coming year seems rather muted, with earnings expanding by a single digit 1.98%. However, the following year seems to show a contrast, with earnings decreasing by -3.14%. This volatility continues into the final year of forecast, with earnings generating AU$636.45m.
Although it is informative knowing the rate of growth each year relative to today’s level, it may be more valuable to determine the rate at which the business is moving on average every year. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of Caltex Australia’s earnings trajectory over time, be more volatile. To calculate this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is -0.10%. This means, we can anticipate Caltex Australia will chip away at a rate of -0.10% every year for the next couple of years.
Extracted from Simply Wall Street