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In December 2017, PSP Swiss Property AG (SWX:PSPN) released its most recent earnings update. Generally, the consensus outlook from analysts appear bearish, with earnings expected to decline by -13.50% in the upcoming year. However, this is still an improvement on its past 5-year earnings growth rate of -15.02%, on average. Currently with a profit of CHF257.40M, the consensus growth rate suggests that earnings will drop to CHF222.67M by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for PSP Swiss Property in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here. View our latest analysis for PSP Swiss Property
Exciting times ahead?
The 8 analysts covering PSPN view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of PSPN’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 1.51% based on the most recent earnings level of CHF257.40M to the final forecast of CHF251.83M by 2021. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of CHF4.79 in the final year of forecast compared to the current CHF5.61 EPS today. Growth in earnings appears to be a result of reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. In 2021, PSPN’s profit margin will have expanded from 80.01% to 84.62%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For PSP Swiss Property, there are three pertinent factors you should further research:
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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 PSP Swiss Property 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 PSP Swiss Property 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 PSP Swiss Property? 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.