Since SGS SA (VTX:SGSN) released its earnings in December 2018, the consensus outlook from analysts appear fairly confident, with earnings expected to grow by 15% in the upcoming year relative to the past 5-year average growth rate of 0.7%. With trailing-twelve-month net income at current levels of CHF643m, we should see this rise to CHF741m in 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for SGS in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How will SGS perform in the near future?
The longer term expectations from the 20 analysts of SGSN is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. 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 SGSN's earnings growth over these next few years.
From the current net income level of CHF643m and the final forecast of CHF849m by 2022, the annual rate of growth for SGSN’s earnings is 9.3%. This leads to an EPS of CHF112.47 in the final year of projections relative to the current EPS of CHF84.53. In 2022, SGSN's profit margin will have expanded from 9.6% to 11%.
Future outlook is only one aspect when you're building an investment case for a stock. For SGS, 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 SGS 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 SGS is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SGS? 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 email@example.com. 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.