Will SSE plc’s (LON:SSE) Earnings Grow In The Next Couple Of Years?

In March 2018, SSE plc (LON:SSE) released its latest earnings announcement, which suggested that the company experienced a immense headwind with earnings falling by -48.63%. Investors may find it useful to understand how market analysts perceive SSE’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 out our latest analysis for SSE

Market analysts’ prospects for next year seems positive, with earnings increasing by a robust 38.16%. However, earnings is forecasted to fall thereafter, reaching UK£1.06b in 2021.

LSE:SSE Future Profit June 24th 18

While it’s useful to be aware of the growth rate each year relative to today’s level, it may be more insightful to determine the rate at which the earnings are moving every year, on average. The advantage of this method is that it ignores near term flucuations and accounts for the overarching direction of SSE’s earnings trajectory over time, be more volatile. To calculate 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 4.06%. This means that, we can anticipate SSE will grow its earnings by 4.06% every year for the next few years.

Next Steps:

For SSE, I’ve put together three key factors 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 SSE 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 SSE is currently mispriced by the market.

3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SSE? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.