In December 2018, Sands China Ltd. (HKG:1928) released its most recent earnings announcement, which showed that the company experienced a robust tailwind, leading to a double-digit earnings growth of 17%. Below is a brief commentary on my key takeaways on how market analysts view Sands China’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts’ outlook for next year seems rather subdued, with earnings expanding by a single digit 6.7%. The growth outlook in the following year seems much more positive with rates arriving at double digit 28% compared to today’s earnings, and finally hitting US$2.7b by 2022.
Although it’s informative understanding the growth each year relative to today’s value, it may be more beneficial gauging the rate at which the earnings are growing on average every year. The pro of this approach is that we can get a better picture of the direction of Sands China’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve inserted 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 12%. This means that, we can anticipate Sands China will grow its earnings by 12% every year for the next couple of years.
For Sands China, I’ve compiled three pertinent 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 1928 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 1928 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1928? 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.