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Far East Hospitality Trust (SGX:Q5T): Is It A Good Long Term Opportunity?

Simply Wall St

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The most recent earnings announcement Far East Hospitality Trust's (SGX:Q5T) released in December 2018 signalled that the business benefited from a significant tailwind, more than doubling its earnings from the prior year. Below is a brief commentary on my key takeaways on how market analysts perceive Far East Hospitality Trust's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

View our latest analysis for Far East Hospitality Trust

Market analysts' prospects for the coming year seems pessimistic, with earnings decreasing by a double-digit -27%. Beyond this, earnings will begin to improve, rising year on year, and arriving at S$87m by 2022.

SGX:Q5T Past and Future Earnings, April 1st 2019

While it’s useful to be aware of the growth rate each year relative to today’s value, it may be more insightful to gauge the rate at which the earnings are moving every year, on average. The advantage of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Far East Hospitality Trust's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've appended 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 0.3%. This means, we can anticipate Far East Hospitality Trust will grow its earnings by 0.3% every year for the next few years.

Next Steps:

For Far East Hospitality Trust, there are three important aspects 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 Q5T 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 Q5T is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of Q5T? 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.