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Sunrise Communications Group AG (VTX:SRCG): Set To Experience A Decrease In Earnings?

Simply Wall St

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After Sunrise Communications Group AG's (VTX:SRCG) recent earnings announcement in March 2019, it seems that analyst forecasts are fairly bearish, with earnings expected to decline by 11% in the upcoming year compared with the past 5-year average growth rate of 57%. Currently with a trailing-twelve-month profit of CHF107m, the consensus growth rate suggests that earnings will drop to CHF95m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

Check out our latest analysis for Sunrise Communications Group

Exciting times ahead?

The longer term expectations from the 10 analysts of SRCG is tilted towards the 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 reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

SWX:SRCG Past and Future Earnings, July 19th 2019

From the current net income level of CHF107m and the final forecast of CHF129m by 2022, the annual rate of growth for SRCG’s earnings is 17%. This leads to an EPS of CHF3.09 in the final year of projections relative to the current EPS of CHF2.37. In 2022, SRCG's profit margin will have expanded from 5.7% to 6.6%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Sunrise Communications Group, there are three essential factors 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 Sunrise Communications 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 Sunrise Communications Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Sunrise Communications 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.