The most recent earnings update SVB Financial Group’s (NASDAQ:SIVB) released in December 2018 showed that the company gained from a large tailwind, leading to a high double-digit earnings growth of 99%. Below, I’ve laid out key numbers on how market analysts view SVB Financial Group’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts’ prospects for next year seems buoyant, with earnings increasing by a robust 12%. This growth seems to continue into the following year with rates reaching double digit 24% compared to today’s earnings, and finally hitting US$1.4b by 2022.
Although it is informative knowing the rate of growth year by year relative to today’s value, it may be more beneficial to determine the rate at which the business is moving every year, on average. The benefit of this approach is that we can get a better picture of the direction of SVB Financial Group’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 10%. This means that, we can anticipate SVB Financial Group will grow its earnings by 10% every year for the next couple of years.
For SVB Financial Group, I’ve put together three essential 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 SIVB 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 SIVB is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SIVB? 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 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.