The most recent earnings release Venture Corporation Limited’s (SGX:V03) announced in December 2018
suggested
that the
business
faced
a
minor
headwind with earnings
deteriorating
from S$373m to S$370m, a change of -0.7%.
Today I want to provide a brief commentary on
how market analysts
perceive
Venture’s
earnings growth
trajectory
over the next
few
years and
whether the future looks brighter.
Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.



View our latest analysis for Venture

Analysts’ outlook
for
the upcoming
year seems rather
muted,
with earnings
expanding
by a single digit 4.4%.
The growth outlook in the following year seems much more
optimistic
with rates
generating
double digit 11% compared to today’s earnings, and finally hitting S$437m by 2022.


SGX:V03 Past and Future Earnings, March 17th 2019
SGX:V03 Past and Future Earnings, March 17th 2019

While
it is
informative knowing
the growth rate
each year
relative to today’s
figure,
it may be more
beneficial
estimating
the rate at which the
company is
moving
on average every year.
The benefit
of this
technique
is that
we can get a bigger picture of the direction of Venture’s earnings trajectory over the long run, irrespective of near term fluctuations,
which may be more relevant for long term investors.
To calculate
this rate,
I put
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 5.4%.
This means,
we can
expect
Venture
will grow its earnings by 5.4% every year
for the next few years.

Next Steps:

For Venture,
there are
three
important
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 V03 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 V03 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of V03? 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.

Daniel Loeb has achieved 16.2% annualized returns over the last 20 years. What is he holding today?

Founder of the event-driven, value-oriented hedge fund Third Point, Daniel Loeb is one of the most successful activist investors on the market today. Explore his portfolio’s top holdings, see how he diversifies his investments, past performance and growth estimates. Click here to view a FREE detailed infographic analysis of Daniel Loeb’s investment portfolio.



Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here