As SIA Engineering Company Limited (SGX:S59) announced its earnings release on 31 March 2019, analysts seem cautiously optimistic, with earnings expected to grow by 4.5% in the upcoming year against the past 5-year average growth rate of -4.5%. With trailing-twelve-month net income at current levels of S$161m, we should see this rise to S$168m in 2020. Below is a brief commentary around SIA Engineering's earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
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Exciting times ahead?
Over the next three years, it seems the consensus view of the 6 analysts covering S59 is skewed towards the 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 S59, 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 4.4% based on the most recent earnings level of S$161m to the final forecast of S$184m by 2022. This leads to an EPS of SGD0.16 in the final year of projections relative to the current EPS of SGD0.14. In 2022, S59's profit margin will have expanded from 16% to 17%.
Future outlook is only one aspect when you're building an investment case for a stock. For SIA Engineering, I've compiled three pertinent 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 SIA Engineering 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 SIA Engineering is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SIA Engineering? 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.