CapitaLand Integrated Commercial Trust has had a rough three months with its share price down 6.0%. But if you pay close attention, you might find that its key financial indicators look quite decent, which could mean that the stock could potentially rise in the long-term given how markets usually reward more resilient long-term fundamentals.
At first glance, CapitaLand Integrated Commercial Trust's ROE doesn't look very promising. However, the fact that the its ROE is quite higher to the industry average of 5.4% doesn't go unnoticed by us. Consequently, this likely laid the ground for the decent growth of 5.2% seen over the past five years by CapitaLand Integrated Commercial Trust. Bear in mind, the company does have a moderately low ROE. It is just that the industry ROE is lower. Therefore, the growth in earnings could also be the result of other factors. For example, it is possible that the broader industry is going through a high growth phase, or that the company has a low payout ratio.
Given that the industry shrunk its earnings at a rate of 2.3% in the same period, the net income growth of the company is quite impressive.
The basis for attaching value to a company is, to a great extent, tied to its earnings growth. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Has the market priced in the future outlook for C38U?
CapitaLand Integrated Commercial Trust seems to be paying out most of its income as dividends judging by its three-year median payout ratio of 86%, meaning the company retains only 14% of its income. However, this is typical for REITs as they are often required by law to distribute most of their earnings.
Besides, CapitaLand Integrated Commercial Trust has been paying dividends for at least ten years or more. This shows that the company is committed to sharing profits with its shareholders. Upon studying the latest analysts' consensus data, we found that the company is expected to keep paying out approximately 102% of its profits over the next three years. However, CapitaLand Integrated Commercial Trust's future ROE is expected to decline to 6.0% despite there being not much change anticipated in the company's payout ratio.
Overall, we feel that CapitaLand Integrated Commercial Trust certainly does have some positive factors to consider. Namely, its significant earnings growth, to which its moderate rate of return likely contributed. While the company is paying out most of its earnings as dividends, it has been able to grow its earnings in spite of it, so that's probably a good sign.$CapLand IntCom T(C38U.SI)$
source:Simply Wall St
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