Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
After Sims Metal Management Limited's (ASX:SGM) recent earnings announcement in December 2018, analyst consensus outlook seem pessimistic, with earnings expected to decline by 9.7% in the upcoming year against the past 5-year average growth rate of 44%. Presently, with latest-twelve-month earnings at AU$204m, we should see this fall to AU$184m by 2020. Below is a brief commentary on the longer term outlook the market has for Sims Metal Management. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Can we expect Sims Metal Management to keep growing?
The 9 analysts covering SGM view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of SGM's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
By 2022, SGM's earnings should reach AU$227m, from current levels of AU$204m, resulting in an annual growth rate of 7.3%. This leads to an EPS of A$1.07 in the final year of projections relative to the current EPS of A$1.01. With a current profit margin of 3.2%, this movement will result in a margin of 3.4% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Sims Metal Management, I've compiled three pertinent factors 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.
- Valuation: What is Sims Metal Management 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 Sims Metal Management is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Sims Metal Management? 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.