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Will Sheng Siong Group Ltd’s (SGX:OV8) Earnings Grow In The Next 12 Months?

Simply Wall St

Looking at Sheng Siong Group Ltd’s (SGX:OV8) earnings update on 31 December 2018, analyst consensus outlook appear cautiously subdued, as a 9.5% rise in profits is expected in the upcoming year, relative to the higher past 5-year average growth rate of 12%. With trailing-twelve-month net income at current levels of S$71m, we should see this rise to S$77m in 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.

Check out our latest analysis for Sheng Siong Group

How is Sheng Siong Group going to perform in the near future?

The longer term view from the 8 analysts covering OV8 is one of 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 OV8, 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.

SGX:OV8 Past and Future Earnings, March 7th 2019

By 2022, OV8’s earnings should reach S$86m, from current levels of S$71m, resulting in an annual growth rate of 6.9%. EPS reaches SGD0.057 in the final year of forecast compared to the current SGD0.047 EPS today. Margins are currently sitting at 7.9%, which is expected to expand to 8.1% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Sheng Siong Group, there are three key factors 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 Sheng Siong Group 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 Sheng Siong Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Sheng Siong Group? 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.