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On 30 June 2019, CapitaLand Commercial Trust (SGX:C61U) released its most recent earnings update. Generally, analyst consensus outlook appear pessimistic, with earnings expected to decline by 15% in the upcoming year against the past 5-year average growth rate of 7.6%. With trailing-twelve-month net income at current levels of S$522m, the consensus growth rate suggests that earnings will decline to S$445m by 2020. Below is a brief commentary on the longer term outlook the market has for CapitaLand Commercial Trust. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
What can we expect from CapitaLand Commercial Trust in the longer term?
Longer term expectations from the 19 analysts covering C61U’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of C61U's earnings growth over these next few years.
From the current net income level of S$522m and the final forecast of S$495m by 2022, the annual rate of growth for C61U’s earnings is 2.6%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of SGD0.095 in the final year of forecast compared to the current SGD0.14 EPS today. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 133% to 106% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For CapitaLand Commercial Trust, there are three relevant aspects you should further research:
- 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.
- Valuation: What is CapitaLand Commercial 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 Commercial Trust is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of CapitaLand Commercial 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!
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 firstname.lastname@example.org. 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.