In December 2018, Sabre Corporation (NASDAQ:SABR) announced its most recent earnings update, which showed that the company gained from a strong tailwind, eventuating to a double-digit earnings growth of 37%. Below, I’ve presented key growth figures on how market analysts view Sabre’s earnings growth trajectory 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.
Market analysts’ consensus outlook for the coming year seems pessimistic, with earnings declining by a double-digit -36%. Over the medium term, earnings should continue to be below today’s level, with a decline of -13% in 2021, eventually reaching US$292m in 2022.
Even though it is informative understanding the growth rate each year relative to today’s value, it may be more valuable analyzing the rate at which the company is moving every year, on average. The advantage of this method is that we can get a better picture of the direction of Sabre’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put 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 7.6%. This means that, we can assume Sabre will grow its earnings by 7.6% every year for the next few years.
For Sabre, I’ve put together three relevant factors you should further examine:
- 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 SABR 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 SABR is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SABR? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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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.