What Do Investors Need To Know About Subsea 7 SA.’s (OB:SUBC) Earnings Trajectory?

The most recent earnings release Subsea 7 SA.’s (OB:SUBC) announced in December 2017 signalled that the business benefited from a slight tailwind, eventuating to a single-digit earnings growth of 4.31%. Below, I’ve presented key growth figures on how market analysts predict Subsea 7’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. View our latest analysis for Subsea 7

Market analysts’ consensus outlook for this coming year seems pessimistic, with earnings decreasing by a double-digit -51.49%. Over the medium term, earnings are expected to continue to be below today’s level, with a decline of -51.01% in 2020, eventually reaching US$222.82M in 2021.

OB:SUBC Future Profit Apr 4th 18
OB:SUBC Future Profit Apr 4th 18

While it’s informative knowing the growth year by year relative to today’s level, it may be more valuable estimating the rate at which the earnings are growing on average every year. The advantage of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Subsea 7’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is -17.77%. This means, we can expect Subsea 7 will chip away at a rate of -17.77% every year for the next few years.

Next Steps:

For Subsea 7, I’ve put together three essential aspects you should further research:

  1. 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.
  2. Valuation: What is SUBC 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 SUBC is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SUBC? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!