SEGRO Plc’s (LSE:SGRO) latest earnings update in June 2017 showed that the business endured a major headwind with earnings deteriorating by -38.80%. Below is a brief commentary on my key takeaways on how market analysts view SEGRO’s earnings growth outlook over the next couple of 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. See our latest analysis for SEGRO
Market analysts’ consensus outlook for next year seems pessimistic, with earnings decreasing by -9.40%. Beyond this, earnings are expected to continue to be below today’s level, with a decrease of -27.30% in 2020, eventually reaching £442.9M in 2021.
Although it’s informative knowing the rate of growth each year relative to today’s level, it may be more beneficial gauging the rate at which the business is growing every year, on average. The advantage of this technique is that we can get a better picture of the direction of SEGRO’s earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To compute this rate, I’ve inserted 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 -20.25%. This means, we can assume SEGRO will chip away at a rate of -20.25% every year for the next few years.
Next Steps:
For SEGRO, there are three relevant 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 SGRO 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 SGRO is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SGRO? 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 pass 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.