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Since CapitaLand Limited (SGX:C31) released its earnings in March 2019, the consensus outlook from analysts appear pessimistic, with earnings expected to decline by 15% in the upcoming year against the past 5-year average growth rate of 13%. Presently, with latest-twelve-month earnings at S$1.8b, we should see this fall to S$1.5b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near 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 CapitaLand
How will CapitaLand perform in the near future?
The longer term expectations from the 17 analysts of C31 is tilted towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of C31'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.
This results in an annual growth rate of 6.8% based on the most recent earnings level of S$1.8b to the final forecast of S$1.8b by 2022. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of SGD0.36 in the final year of forecast compared to the current SGD0.42 EPS today. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 31% to 22% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For CapitaLand, there are three key aspects you should look at:
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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.
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Future Earnings: How does CapitaLand's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of CapitaLand? 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.