What Should Investors Know About PropNex Limited’s (SGX:OYY) Earnings Outlook?

PropNex Limited’s (SGX:OYY) released its most recent earnings update in December 2018, which confirmed that the business experienced a strong tailwind, eventuating to a double-digit earnings growth of 19%. Below, I’ve laid out key growth figures on how market analysts perceive PropNex’s earnings growth outlook over the next couple of 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.

Check out our latest analysis for PropNex

Market analysts’ consensus outlook for the upcoming year seems rather subdued, with earnings increasing by a single digit 8.2%. The growth outlook in the following year seems much more optimistic with rates generating double digit 20% compared to today’s earnings, and finally hitting S$25m by 2022.

SGX:OYY Past and Future Earnings, February 27th 2019
SGX:OYY Past and Future Earnings, February 27th 2019

While it is useful to understand the growth year by year relative to today’s figure, it may be more beneficial determining the rate at which the business is growing on average every year. The pro of this approach is that we can get a better picture of the direction of PropNex’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 the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 8.3%. This means that, we can assume PropNex will grow its earnings by 8.3% every year for the next few years.

Next Steps:

For PropNex, I’ve put together three essential factors 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 OYY 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 OYY is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of OYY? 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.