Since Stockland (ASX:SGP) released its earnings in June 2018, it seems that analyst forecasts are fairly bearish, as a -13% fall in profits is expected in the upcoming year relative to the past 5-year average growth rate of 20%. Currently with a railing-twelve-month profit of AU$1.0b, the consensus growth rate suggests that earnings will drop to AU$887m by 2019. Below is a brief commentary on the longer term outlook the market has for Stockland. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
How will Stockland perform in the near future?
The view from 9 analysts over the next three years is one of negative sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. 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 SGP’s earnings growth over these next few years.
From the current net income level of AU$1.0b and the final forecast of AU$943m by 2021, the annual rate of growth for SGP’s earnings is -2.2%. EPS reaches A$0.36 in the final year of forecast compared to the current A$0.42 EPS today. The main reason for SGP’s earnings contraction is top-line expansion of 1.8%, which is predicted to lag cost growth leading up to 2021. Furthermore, the current 37% margin is expected to contract to 32% by the end of 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Stockland, I’ve put together three pertinent 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 Stockland 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 Stockland is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Stockland? 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 email@example.com.