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What Should We Expect From Total System Services, Inc.’s (NYSE:TSS) Earnings Over The Next Few Years?

Simply Wall St

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The most recent earnings release Total System Services, Inc.’s (NYSE:TSS) announced in December 2018 confirmed that the business endured a slight headwind with earnings deteriorating from US$586m to US$577m, a change of -1.6%. Today I want to provide a brief commentary on how market analysts predict Total System Services’s earnings growth outlook over the next couple of years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

View our latest analysis for Total System Services

Analysts’ outlook for this coming year seems optimistic, with earnings expanding by a robust 13%. This growth seems to continue into the following year with rates reaching double digit 31% compared to today’s earnings, and finally hitting US$865m by 2022.

NYSE:TSS Past and Future Earnings, March 26th 2019

Although it’s useful to understand the growth rate each year relative to today’s value, it may be more valuable estimating the rate at which the business is rising or falling on average every year. The pro of this approach is that we can get a bigger picture of the direction of Total System Services’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 the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 13%. This means, we can anticipate Total System Services will grow its earnings by 13% every year for the next few years.

Next Steps:

For Total System Services, there are three fundamental factors you should further research:

  1. 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.
  2. Valuation: What is TSS 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 TSS is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of TSS? 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 editorial-team@simplywallst.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.