The most recent earnings announcement BreadTalk Group Limited’s (SGX:CTN) released in December 2018 revealed that the business experienced a significant headwind with earnings deteriorating by -30%. Below, I’ve laid out key numbers on how market analysts predict BreadTalk Group’s earnings growth trajectory over the next couple of years and whether the future looks brighter. 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.
View our latest analysis for BreadTalk Group
Analysts’ outlook for next year seems rather subdued, with earnings expanding by a single digit 9.5%. The growth outlook in the following year seems much more buoyant with rates reaching double digit 27% compared to today’s earnings, and finally hitting S$28m by 2022.
While it is informative knowing the growth rate year by year relative to today’s value, it may be more insightful evaluating the rate at which the company is moving on average every year. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of BreadTalk Group’s earnings trajectory over time, 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 18%. This means that, we can expect BreadTalk Group will grow its earnings by 18% every year for the next couple of years.
Next Steps:
For BreadTalk Group, there are three important aspects you should further examine:
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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.
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Valuation: What is CTN 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 CTN is currently mispriced by the market.
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Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CTN? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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