Based on SVB Financial Group's (NASDAQ:SIVB) earnings update in December 2018, the consensus outlook from analysts appear somewhat bearish, with profits predicted to rise by 11% next year against the higher past 5-year average growth rate of 27%. By 2020, we can expect SVB Financial Group’s bottom line to reach US$1.1b, a jump from the current trailing-twelve-month of US$974m. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for SVB Financial Group in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect SVB Financial Group to keep growing?
Over the next three years, it seems the consensus view of the 16 analysts covering SIVB is skewed towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for SIVB, 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.
By 2022, SIVB's earnings should reach US$1.4b, from current levels of US$974m, resulting in an annual growth rate of 9.6%. This leads to an EPS of $24.84 in the final year of projections relative to the current EPS of $18.35. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 38% to 35% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For SVB Financial Group, I've compiled three pertinent factors 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 SVB Financial Group 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 SVB Financial Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SVB Financial Group? 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.