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Based on Total System Services, Inc.’s (NYSE:TSS) earnings update on 31 December 2018, the consensus outlook from analysts appear somewhat bearish, with earnings expected to grow by 13% in the upcoming year compared with the higher past 5-year average growth rate of 21%. By 2020, we can expect Total System Services’s bottom line to reach US$654m, a jump from the current trailing-twelve-month of US$577m. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
How will Total System Services perform in the near future?
The longer term expectations from the 23 analysts of TSS is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. 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 TSS’s earnings growth over these next few years.
From the current net income level of US$577m and the final forecast of US$865m by 2022, the annual rate of growth for TSS’s earnings is 13%. This leads to an EPS of $4.75 in the final year of projections relative to the current EPS of $3.17. In 2022, TSS’s profit margin will have expanded from 14% to 19%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Total System Services, there are three essential 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 Total System Services 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 Total System Services is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Total System Services? 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 email@example.com.