Based on Abacus Property Group’s (ASX:ABP) recently announced earnings update on 30 June 2019, analyst forecasts appear to be bearish, with profits predicted to drop by 18% next year compared with the past 5-year average growth rate of 16%. Currently with a trailing-twelve-month profit of AU$201m, the consensus growth rate suggests that earnings will drop to AU$166m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How will Abacus Property Group perform in the near future?
The view from 3 analysts over the next three years is one of negative sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of ABP’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of AU$201m and the final forecast of AU$137m by 2022, the annual rate of growth for ABP’s earnings is -8.5%. EPS reaches A$0.21 in the final year of forecast compared to the current A$0.35 EPS today. The primary reason for earnings contraction is due to revenue declining at an average annual rate of -3.8%. With earnings declining at a faster rate over time, margins is expected to contract from 66% to 55% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Abacus Property Group, there are three fundamental factors you should look at:
- 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 Abacus Property Group 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 Abacus Property Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Abacus Property Group? 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 firstname.lastname@example.org. 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.