In August 2019, SKYCITY Entertainment Group Limited (NZSE:SKC) released its latest earnings announcement, which confirmed that the company benefited from a small tailwind, eventuating to a single-digit earnings growth of 1.3%. Below is a brief commentary on my key takeaways on how market analysts predict SKYCITY Entertainment Group’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. 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.
Market analysts’ consensus outlook for the coming year seems buoyant, with earnings climbing by a robust 24%. However, the following year seems to show a contrast, with earnings decreasing by -6.2%. This volatility continues into the final year of forecast, with earnings reaching NZ$156m.
While it’s helpful to understand the growth year by year relative to today’s figure, it may be more beneficial analyzing the rate at which the earnings are rising or falling every year, on average. The pro of this method is that it ignores near term flucuations and accounts for the overarching direction of SKYCITY Entertainment Group’s earnings trajectory over time, fluctuate up and down. To calculate this rate, I put 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 -3.8%. This means that, we can anticipate SKYCITY Entertainment Group will chip away at a rate of -3.8% every year for the next couple of years.
For SKYCITY Entertainment Group, there are 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 SKC 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 SKC is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SKC? 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.