Will EastGroup Properties Inc’s (NYSE:EGP) Earnings Grow In The Year Ahead?

After EastGroup Properties Inc’s (NYSE:EGP) earnings announcement on 30 September 2018, analyst forecasts appear to be pessimistic, as a -4.5% fall in profits is expected in the upcoming year against the past 5-year average growth rate of 21%. Presently, with latest-twelve-month earnings at US$88m, we should see this fall to US$84m by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for EastGroup Properties in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

Check out our latest analysis for EastGroup Properties

How will EastGroup Properties perform in the near future?

The 8 analysts covering EGP 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. To get an idea of the overall earnings growth trend for EGP, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

NYSE:EGP Future Profit November 13th 18
NYSE:EGP Future Profit November 13th 18

By 2021, EGP’s earnings should reach US$83m, from current levels of US$83m, resulting in an annual growth rate of -0.08%. EPS reaches $2.32 in the final year of forecast compared to the current $2.45 EPS today. Contraction in the bottom line seems to suggest cost growth exceeding top-line growth of 6.4% in the next three years. Furthermore, the current 30% margin is expected to contract to 25% by the end of 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For EastGroup Properties, I’ve put together three essential 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 EastGroup Properties 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 EastGroup Properties is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of EastGroup Properties? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.