Perennial Real Estate Holdings Limited’s (SGX:40S) latest earnings announcement in December 2017 showed that the business gained from a major tailwind, more than doubling its earnings from the prior year. Below is a brief commentary on my key takeaways on how market analysts view Perennial Real Estate Holdings’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. 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 Perennial Real Estate Holdings
Analysts’ outlook for the coming year seems pessimistic, with earnings falling by a double-digit -86.84%. Over the medium term, earnings are expected to continue to be below today’s level, with a decline of -89.13% in 2020, eventually reaching S$10.90M in 2021.
While it’s useful to understand the growth rate year by year relative to today’s value, it may be more beneficial to evaluate the rate at which the business is rising or falling every year, on average. The advantage of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Perennial Real Estate Holdings’s earnings trajectory over time, 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 -82.21%. This means, we can presume Perennial Real Estate Holdings will chip away at a rate of -82.21% every year for the next couple of years.
Next Steps:
For Perennial Real Estate Holdings, I’ve compiled three relevant aspects you should further examine:
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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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Valuation: What is 40S 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 40S is currently mispriced by the market.
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Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 40S? 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.