What Should Investors Know About CapitaLand Limited’s (SGX:C31) Earnings Trend?
The most recent earnings update CapitaLand Limited’s (SGX:C31) released in December 2017 revealed that the business gained from a robust tailwind, leading to a double-digit earnings growth of 30.28%. Today I want to provide a brief commentary on how market analysts perceive CapitaLand’s earnings growth trajectory 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. See our latest analysis for CapitaLand
Analysts’ outlook for this coming year seems pessimistic, with earnings reducing by a double-digit -23.88%. In the next couple of years, earnings are expected to continue to be below today’s level, with a decline of -22.56% in 2020, eventually reaching S$1.20B in 2021.
Even though it is useful to understand the growth each year relative to today’s value, it may be more insightful to evaluate the rate at which the earnings are rising or falling on average every year. The benefit of this approach is that we can get a bigger picture of the direction of CapitaLand’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 -10.30%. This means, we can presume CapitaLand will chip away at a rate of -10.30% every year for the next couple of years.
Next Steps:
For CapitaLand, I’ve compiled three fundamental aspects 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.
Future Earnings: How does C31’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of C31? 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 pass 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.
