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Will Sydney Airport Limited's (ASX:SYD) Earnings Grow In The Next Couple Of Years?

Simply Wall St

The latest earnings announcement Sydney Airport Limited (ASX:SYD) released in February 2019 suggested that the business experienced a small tailwind, eventuating to a single-digit earnings growth of 6.5%. Below, I've laid out key growth figures on how market analysts perceive Sydney Airport's earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

See our latest analysis for Sydney Airport

Analysts' outlook for the upcoming year seems rather muted, with earnings increasing by a single digit 6.0%. The growth outlook in the following year seems much more positive with rates reaching double digit 14% compared to today’s earnings, and finally hitting AU$452m by 2022.

ASX:SYD Past and Future Earnings, August 6th 2019

Even though it is helpful to be aware of the growth each year relative to today’s figure, it may be more insightful to analyze the rate at which the company is moving every year, on average. The advantage of this method is that it ignores near term flucuations and accounts for the overarching direction of Sydney Airport's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 6.7%. This means, we can expect Sydney Airport will grow its earnings by 6.7% every year for the next couple of years.

Next Steps:

For Sydney Airport, there are three relevant 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 SYD 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 SYD is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SYD? 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.