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The Star Entertainment Group Limited (ASX:SGR): Poised For Long Term Success?

Simply Wall St

After The Star Entertainment Group Limited's (ASX:SGR) earnings announcement on 30 June 2019, the consensus outlook from analysts appear fairly confident, with profits predicted to increase by 20% next year relative to the past 5-year average growth rate of 8.9%. With trailing-twelve-month net income at current levels of AU$198m, we should see this rise to AU$237m in 2020. Below is a brief commentary around Star Entertainment Group's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.

Check out our latest analysis for Star Entertainment Group

Can we expect Star Entertainment Group to keep growing?

Over the next three years, it seems the consensus view of the 10 analysts covering SGR is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for SGR, 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.

ASX:SGR Past and Future Earnings, August 16th 2019

This results in an annual growth rate of 6.8% based on the most recent earnings level of AU$198m to the final forecast of AU$207m by 2022. EPS reaches A$0.23 in the final year of forecast compared to the current A$0.22 EPS today. However, the near term margins may change heading into 2022, from the current levels of 9.1% to 8.5%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Star Entertainment Group, I've put together three fundamental 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 Star Entertainment 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 Star Entertainment Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Star Entertainment 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.