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Simon Property Group, Inc. (NYSE:SPG): Earnings To Drop Next Year, Is It A Long-Term Trend?

Luis Baughman

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The most recent earnings release Simon Property Group, Inc.’s (NYSE:SPG) announced in December 2018 signalled that the business experienced a strong tailwind, leading to a double-digit earnings growth of 25%. Below, I’ve presented key growth figures on how market analysts view Simon Property Group’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

See our latest analysis for Simon Property Group

Market analysts’ consensus outlook for this coming year seems pessimistic, with earnings reducing by -7.3%. In the next couple of years, earnings are expected to continue to be below today’s level, with a decrease of -2.4% in 2021, eventually reaching US$2.4b in 2022.

NYSE:SPG Past and Future Earnings, February 25th 2019

While it’s useful to understand the rate of growth each year relative to today’s level, it may be more beneficial evaluating the rate at which the earnings are moving every year, on average. The benefit of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Simon Property Group’s earnings trajectory over time, fluctuate up and down. To compute this rate, I’ve inserted 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 -0.6%. This means that, we can presume Simon Property Group will chip away at a rate of -0.6% every year for the next few years.

Next Steps:

For Simon Property Group, I’ve put together three key factors you should look at:

  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 SPG 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 SPG is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SPG? 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.