Stockland’s (ASX:SGP) released its most recent earnings update in June 2018, which revealed that the business faced a major headwind with earnings deteriorating by -14%. Below is a brief commentary on my key takeaways on how market analysts predict Stockland’s earnings growth outlook over the next few years and whether the future looks brighter. 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 next year seems pessimistic, with earnings reducing by a double-digit -13%. Beyond this, earnings are predicted to continue to be below today’s level, with a decline of -11% in 2021, eventually reaching AU$915m in 2022.
While it’s helpful to be aware of the growth rate year by year relative to today’s level, it may be more valuable gauging the rate at which the earnings are moving every year, on average. The benefit of this technique is that we can get a bigger picture of the direction of Stockland’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve appended 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 -2.2%. This means that, we can anticipate Stockland will chip away at a rate of -2.2% every year for the next few years.
For Stockland, I’ve compiled three important aspects 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 SGP 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 SGP is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SGP? 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 firstname.lastname@example.org.