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Will Suncorp Group Limited's (ASX:SUN) Earnings Grow Over The Next Few Years?

Simply Wall St

In August 2019, Suncorp Group Limited (ASX:SUN) released its most recent earnings announcement, which indicated that the business gained from a robust tailwind, leading to a double-digit earnings growth of 10%. Below, I've laid out key growth figures on how market analysts predict Suncorp Group's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

Check out our latest analysis for Suncorp Group

Analysts' outlook for the upcoming year seems rather muted, with earnings growing by a single digit 4.9%. The growth outlook in the following year seems much more positive with rates reaching double digit 12% compared to today’s earnings, and finally hitting AU$1.2b by 2022.

ASX:SUN Past and Future Earnings, September 1st 2019

While it’s useful to be aware of the growth each year relative to today’s level, it may be more beneficial to determine the rate at which the company is moving on average every year. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of Suncorp Group's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 4.8%. This means that, we can expect Suncorp Group will grow its earnings by 4.8% every year for the next few years.

Next Steps:

For Suncorp Group, I've put together three important aspects you should further research:

  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 SUN 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 SUN is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SUN? 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.