The latest earnings announcement Lendlease Group (ASX:LLC) released in August 2019 confirmed that the company faced a significant headwind with earnings deteriorating by -41%. Below is a brief commentary on my key takeaways on how market analysts perceive Lendlease Group's earnings growth outlook over the next few 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.
Market analysts' prospects for next year seems buoyant, with earnings climbing by a significant 61%. This level of earnings is expected to be maintained over the next couple of years, plateauing at AU$780m by 2022.
Even though it is helpful to understand the growth rate year by year relative to today’s value, it may be more beneficial evaluating the rate at which the company is moving every year, on average. The benefit of this approach is that we can get a better picture of the direction of Lendlease Group's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I've appended 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 7.9%. This means that, we can expect Lendlease Group will grow its earnings by 7.9% every year for the next couple of years.
For Lendlease Group, I've compiled three important factors you should further research:
- 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 LLC 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 LLC is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of LLC? 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 email@example.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.