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Vicinity Centres (ASX:VCX): Is It A Smart Long Term Opportunity?

Simply Wall St

As Vicinity Centres (ASX:VCX) announced its earnings release on 30 June 2019, the consensus outlook from analysts appear highly confident, as a 91% rise in profits is expected in the upcoming year, compared with the past 5-year average growth rate of 8.5%. With trailing-twelve-month net income at current levels of AU$346m, we should see this rise to AU$660m in 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Vicinity Centres in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

View our latest analysis for Vicinity Centres

How is Vicinity Centres going to perform in the near future?

Longer term expectations from the 5 analysts covering VCX’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of VCX's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

ASX:VCX Past and Future Earnings, August 15th 2019

By 2022, VCX's earnings should reach AU$660m, from current levels of AU$346m, resulting in an annual growth rate of 21%. EPS reaches A$0.18 in the final year of forecast compared to the current A$0.090 EPS today. Margins are currently sitting at 27%, which is expected to expand to 63% by 2022.

Next Steps:

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