Looking at Singapore Telecommunications Limited's (SGX:Z74) earnings update in March 2019, analyst forecasts appear to be bearish, as a 1.9% fall in profits is expected in the upcoming year compared with the past 5-year average growth rate of 3.2%. Presently, with latest-twelve-month earnings at S$3.1b, we should see this fall to S$3.0b by 2020. Below is a brief commentary around Singapore Telecommunications's earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
What can we expect from Singapore Telecommunications in the longer term?
The view from 21 analysts over the next three years is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of Z74's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of S$3.1b and the final forecast of S$3.7b by 2022, the annual rate of growth for Z74’s earnings is 5.9%. This leads to an EPS of SGD0.22 in the final year of projections relative to the current EPS of SGD0.19. With a current profit margin of 18%, this movement will result in a margin of 21% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Singapore Telecommunications, I've compiled three pertinent aspects you should further examine:
- 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 Telecommunications 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 Telecommunications is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Singapore Telecommunications? 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.