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What Should Investors Know About The Future Of Sydney Airport Limited's (ASX:SYD)?

Simply Wall St

After Sydney Airport Limited's (ASX:SYD) earnings announcement in December 2018, it seems that analyst expectations are fairly bearish, as a 6.4% rise in profits is expected in the upcoming year, against the higher past 5-year average growth rate of 30%. By 2020, we can expect Sydney Airport’s bottom line to reach AU$396m, a jump from the current trailing-twelve-month of AU$373m. 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. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

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See our latest analysis for Sydney Airport

How is Sydney Airport going to perform in the near future?

The longer term expectations from the 11 analysts of SYD is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for SYD, 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.

ASX:SYD Past and Future Earnings, May 16th 2019

By 2022, SYD's earnings should reach AU$447m, from current levels of AU$373m, resulting in an annual growth rate of 6.1%. EPS reaches A$0.19 in the final year of forecast compared to the current A$0.17 EPS today. With a current profit margin of 24%, this movement will result in a margin of 24% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Sydney Airport, there are three key aspects you should further examine:

  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 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.
  3. 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!

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.