What Do Investors Need To Know About Kiwi Property Group Limited’s (NZSE:KPG) Growth?

Since Kiwi Property Group Limited (NZSE:KPG) released its earnings in March 2019, the consensus outlook from analysts appear pessimistic, as a 18% fall in profits is expected in the upcoming year relative to the past 5-year average growth rate of 3.9%. With trailing-twelve-month net income at current levels of NZ$138m, the consensus growth rate suggests that earnings will decline to NZ$113m by 2020. Below is a brief commentary around Kiwi Property Group’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

Check out our latest analysis for Kiwi Property Group

How is Kiwi Property Group going to perform in the near future?

The 7 analysts covering KPG view its longer term outlook with a 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 KPG’s earnings growth over these next few years.

NZSE:KPG Past and Future Earnings, September 16th 2019
NZSE:KPG Past and Future Earnings, September 16th 2019

From the current net income level of NZ$138m and the final forecast of NZ$138m by 2022, the annual rate of growth for KPG’s earnings is -0.5%. This leads to an EPS of NZ$0.089 in the final year of projections relative to the current EPS of NZ$0.097. Fall in earnings appears to be a result of a reduction in the top line of -3.3%, squeezing the bottom line. With a current profit margin of 58%, this movement will result in a margin of 66% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Kiwi Property Group, I’ve put together three pertinent aspects you should look at:

  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 Kiwi Property Group 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 Kiwi Property Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Kiwi Property Group? 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 editorial-team@simplywallst.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.