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Based on Sands China Ltd.’s (HKG:1928) earnings update in December 2018, analyst consensus outlook appear cautiously optimistic, as a 16% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of -9.8%. Presently, with latest-twelve-month earnings at US$1.9b, we should see this growing to US$2.2b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Sands China in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Exciting times ahead?
Over the next three years, it seems the consensus view of the 25 analysts covering 1928 is skewed towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2022, 1928’s earnings should reach US$2.6b, from current levels of US$1.9b, resulting in an annual growth rate of 10%. This leads to an EPS of $0.33 in the final year of projections relative to the current EPS of $0.23. Margins are currently sitting at 22%, which is expected to expand to 25% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Sands China, I’ve compiled three pertinent aspects you should further examine:
- 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 Sands China 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 Sands China is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Sands China? 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 email@example.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.