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LendLease Group’s (ASX:LLC) latest earnings announcement in June 2018 suggested that the company benefited from a small tailwind, leading to a single-digit earnings growth of 4.5%. Below, I’ve laid out key numbers on how market analysts perceive LendLease Group’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts’ expectations for this coming year seems pessimistic, with earnings falling by a double-digit -41%. In the next couple of years, earnings will begin to improve, rising year on year, and generating AU$811m by 2022.
Even though it’s informative knowing the growth each year relative to today’s level, it may be more valuable to determine the rate at which the business is moving on average every year. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of LendLease Group’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 2.9%. This means that, we can expect LendLease Group will grow its earnings by 2.9% every year for the next few years.
For LendLease Group, there are three fundamental aspects you should look at:
- 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 LLC 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 LLC is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of LLC? 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 past 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. For errors that warrant correction please contact the editor at email@example.com.