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On 31 March 2019, SATS Ltd. (SGX:S58) released its earnings update. Generally, analyst consensus outlook appear cautiously subdued, with earnings expected to grow by 4.6% in the upcoming year compared with the higher past 5-year average growth rate of 8.5%. Presently, with latest-twelve-month earnings at S$248m, we should see this growing to S$260m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
What can we expect from SATS in the longer term?
The 12 analysts covering S58 view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of S58's earnings growth over these next few years.
By 2022, S58's earnings should reach S$295m, from current levels of S$248m, resulting in an annual growth rate of 5.9%. EPS reaches SGD0.26 in the final year of forecast compared to the current SGD0.22 EPS today. Margins are currently sitting at 14%, which is expected to expand to 14% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For SATS, there are three pertinent aspects 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 SATS 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 SATS is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SATS? 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 firstname.lastname@example.org. 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.