Since Sydney Airport Limited (ASX:SYD) released its earnings in June 2018, analyst forecasts seem fairly subdued, as a 12% rise in profits is expected in the upcoming year, relative to the higher past 5-year average growth rate of 33%. By 2019, we can expect Sydney Airport’s bottom line to reach AU$393m, a jump from the current trailing-twelve-month AU$350m. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Sydney Airport in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How will Sydney Airport perform in the near future?
Longer term expectations from the 12 analysts covering SYD’s stock is one of 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 reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of AU$350m and the final forecast of AU$474m by 2021, the annual rate of growth for SYD’s earnings is 7.5%. EPS reaches A$0.21 in the final year of forecast compared to the current A$0.16 EPS today. In 2021, SYD’s profit margin will have expanded from 24% to 27%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Sydney Airport, there are three relevant 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 Sydney Airport 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 Sydney Airport is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Sydney Airport? 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.