Singapore Technologies Engineering Ltd’s (SGX:S63) most recent earnings announcement in December 2018 showed that the business experienced a slight headwind with earnings falling from S$503m to S$494m, a change of -1.7%. Below, I’ve laid out key numbers on how market analysts view Singapore Technologies Engineering’s earnings growth outlook over the next couple of years and whether the future looks brighter. 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.
Analysts’ outlook for the upcoming year seems positive, with earnings rising by a robust 22%. This growth seems to continue into the following year with rates arriving at double digit 35% compared to today’s earnings, and finally hitting S$734m by 2022.
While it is helpful to understand the rate of growth year by year relative to today’s level, it may be more valuable estimating the rate at which the business is moving every year, on average. The advantage of this technique is that we can get a bigger picture of the direction of Singapore Technologies Engineering’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put 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 13%. This means that, we can expect Singapore Technologies Engineering will grow its earnings by 13% every year for the next couple of years.
For Singapore Technologies Engineering, I’ve compiled three fundamental aspects you should further research:
- 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 S63 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 S63 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of S63? 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 firstname.lastname@example.org. 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.