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On 31 December 2018, Total System Services, Inc. (NYSE:TSS) announced its earnings update. Overall, analyst consensus outlook appear cautiously subdued, with profits predicted to rise by 13% next year compared with the higher past 5-year average growth rate of 21%. Currently with trailing-twelve-month earnings of US$577m, we can expect this to reach US$654m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
How is Total System Services going to perform in the near future?
The view from 23 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for TSS, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 13% based on the most recent earnings level of US$577m to the final forecast of US$865m by 2022. This leads to an EPS of $4.75 in the final year of projections relative to the current EPS of $3.17. With a current profit margin of 14%, this movement will result in a margin of 19% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Total System Services, I’ve put together three pertinent 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 Total System Services 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 Total System Services is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Total System Services? 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.