What Do Analysts Think About Ship Finance International Limited’s (NYSE:SFL) Earnings Trajectory?

Ship Finance International Limited’s (NYSE:SFL) latest earnings announcement in December 2018 revealed that the company experienced a significant headwind with earnings declining by -27%. Below is my commentary, albeit very simple and high-level, on how market analysts view Ship Finance International’s earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

Check out our latest analysis for Ship Finance International

Market analysts’ prospects for next year seems optimistic, with earnings increasing by a significant 75%. This high growth in earnings is expected to continue, bringing the bottom line up to US$162m by 2022.

NYSE:SFL Past and Future Earnings, March 5th 2019
NYSE:SFL Past and Future Earnings, March 5th 2019

Even though it is helpful to be aware of the growth year by year relative to today’s level, it may be more beneficial determining the rate at which the business is growing on average every year. The advantage of this approach is that we can get a better picture of the direction of Ship Finance International’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 26%. This means, we can anticipate Ship Finance International will grow its earnings by 26% every year for the next few years.

Next Steps:

For Ship Finance International, there are three key factors 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 SFL 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 SFL is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SFL? 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.