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How Do Analysts See The Star Entertainment Group Limited (ASX:SGR) Performing Over The Next Few Years?

The latest earnings release The Star Entertainment Group Limited’s (ASX:SGR) announced in June 2018 confirmed that the business experienced a immense headwind with earnings deteriorating by -44%. Below is a brief commentary on my key takeaways on how market analysts perceive Star Entertainment Group’s earnings growth outlook over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

Check out our latest analysis for Star Entertainment Group

Analysts’ outlook for next year seems optimistic, with earnings growing by a significant 86%. Earnings are predicted to shoot up to around AU$297m in the following year before plateauing, heading into 2021.

ASX:SGR Future Profit October 10th 18

Even though it is informative knowing the growth each year relative to today’s level, it may be more beneficial determining the rate at which the company is moving every year, on average. The benefit of this method is that we can get a bigger picture of the direction of Star Entertainment Group’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 19%. This means, we can anticipate Star Entertainment Group will grow its earnings by 19% every year for the next few years.

Next Steps:

For Star Entertainment Group, I’ve compiled three relevant aspects you should further research:

  1. 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.
  2. Valuation: What is SGR 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 SGR is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SGR? 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 editorial-team@simplywallst.com.