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StarHub Ltd (SGX:CC3): Will The Growth Last?

Simply Wall St

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Based on StarHub Ltd's (SGX:CC3) earnings update in March 2019, the consensus outlook from analysts appear fairly confident, as a 0.2% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of -12%. With trailing-twelve-month net income at current levels of S$194m, we should see this rise to S$194m in 2020. Below is a brief commentary around StarHub'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.

See our latest analysis for StarHub

How is StarHub going to perform in the near future?

The 21 analysts covering CC3 view its longer term outlook with a negative 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 CC3, 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.

SGX:CC3 Past and Future Earnings, June 18th 2019

This results in an annual growth rate of -3.7% based on the most recent earnings level of S$194m to the final forecast of S$185m by 2022. This leads to an EPS of SGD0.096 in the final year of projections relative to the current EPS of SGD0.11. Fall in earnings appears to be a result of revenue declining at an average annual rate of -0.7%. With earnings declining at a faster rate over time, margins is expected to contract from 8.2% to 8.2% by the end of 2022.

Next Steps:

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