After Singapore Technologies Engineering Ltd's (SGX:S63) earnings announcement on 31 December 2018, the consensus outlook from analysts appear fairly confident, with earnings expected to grow by 22% in the upcoming year relative to the past 5-year average growth rate of -2.5%. Presently, with latest-twelve-month earnings at S$494m, we should see this growing to S$602m by 2020. Below is a brief commentary on the longer term outlook the market has for Singapore Technologies Engineering. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
How is Singapore Technologies Engineering going to perform in the near future?
Longer term expectations from the 14 analysts covering S63’s stock 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. 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 S63's earnings growth over these next few years.
From the current net income level of S$494m and the final forecast of S$734m by 2022, the annual rate of growth for S63’s earnings is 13%. This leads to an EPS of SGD0.24 in the final year of projections relative to the current EPS of SGD0.16. Margins are currently sitting at 7.4%, which is expected to expand to 8.4% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Singapore Technologies Engineering, there are three essential 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 Singapore Technologies Engineering 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 Singapore Technologies Engineering is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Singapore Technologies Engineering? 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.