The most recent earnings release Singapore Exchange Limited's (SGX:S68) announced in July 2019 indicated that the company gained from a slight tailwind, leading to a single-digit earnings growth of 7.7%. Below, I've laid out key growth figures on how market analysts view Singapore Exchange's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. 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.
Analysts' expectations for the coming year seems rather subdued, with earnings growing by a single digit 4.8%. The growth outlook in the following year seems much more positive with rates generating double digit 10% compared to today’s earnings, and finally hitting S$436m by 2022.
Although it is informative understanding the growth rate each year relative to today’s figure, it may be more valuable to gauge the rate at which the business is moving every year, on average. The advantage of this technique is that we can get a bigger picture of the direction of Singapore Exchange'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 3.9%. This means, we can anticipate Singapore Exchange will grow its earnings by 3.9% every year for the next few years.
For Singapore Exchange, I've put together three essential factors you should further examine:
- Valuation: What is S68 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 S68 is currently mispriced by the market.
- Future Earnings: How does S68's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of S68? 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.