What Do Analysts Think About SIA Engineering Company Limited's (SGX:S59) Long Term Outlook?

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SIA Engineering Company Limited's (SGX:S59) latest earnings announcement in March 2019 showed that the company faced a immense headwind with earnings deteriorating by -13%. Below, I've laid out key numbers on how market analysts predict SIA Engineering's earnings growth trajectory over the next few 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.

View our latest analysis for SIA Engineering

Analysts' expectations for this coming year seems rather subdued, with earnings increasing by a single digit 3.8%. The growth outlook in the following year seems much more optimistic with rates reaching double digit 11% compared to today’s earnings, and finally hitting S$179m by 2022.

Even though it’s useful to understand the growth rate year by year relative to today’s figure, it may be more valuable evaluating the rate at which the earnings are growing every year, on average. The advantage of this approach is that we can get a better picture of the direction of SIA 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've appended 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 4.2%. This means, we can presume SIA Engineering will grow its earnings by 4.2% every year for the next couple of years.

Next Steps:

For SIA Engineering, I've put together three key aspects you should further examine:

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 S59 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 S59 is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of S59? 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.