In December 2017, CapitaLand Mall Trust (SGX:C38U) announced its latest earnings update. Overall, it seems that analyst forecasts are fairly bearish, with profits predicted to drop by -35.88% next year compared with the past 5-year average growth rate of 5.31%. Currently with a profit of S$657.65M, the consensus growth rate suggests that earnings will drop to S$421.72M by 2019. Below is a brief commentary around CapitaLand Mall Trust’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here. See our latest analysis for CapitaLand Mall Trust

How will CapitaLand Mall Trust perform in the near future?

Over the next three years, it seems the consensus view of the 19 analysts covering C38U is skewed towards the negative sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of C38U’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

From the current net income level of S$657.65M and the final forecast of S$568.14M by 2021, the annual rate of growth for C38U’s earnings is -5.19%. This leads to an EPS of SGD0.14 in the final year of projections relative to the current EPS of SGD0.19. The primary reason for earnings contraction is due to top-line expansion of 3.21%, which is predicted to lag cost growth leading up to 2021. With this high cost growth, margins is expected to contract from 96.36% to 74.49% by the end of 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For CapitaLand Mall Trust, I’ve compiled three fundamental aspects 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 CapitaLand Mall Trust 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 CapitaLand Mall Trust is currently mispriced by the market.

3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of CapitaLand Mall Trust? 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.