Based on 58.com Inc.'s (NYSE:WUBA) earnings update in March 2019, the consensus outlook from analysts appear somewhat bearish, with profits predicted to rise by 11% next year compared with the higher past 5-year average growth rate of 53%. Presently, with latest-twelve-month earnings at CN¥2.0b, we should see this growing to CN¥2.2b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
How will 58.com perform in the near future?
The longer term view from the 17 analysts covering WUBA is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of WUBA's earnings growth over these next few years.
This results in an annual growth rate of 15% based on the most recent earnings level of CN¥2.0b to the final forecast of CN¥3.1b by 2022. EPS reaches CN¥25.85 in the final year of forecast compared to the current CN¥13.54 EPS today. However, the near term margins may change heading into 2022, from the current levels of 15% to 15%.
Future outlook is only one aspect when you're building an investment case for a stock. For 58.com, there are three important factors you should further research:
- 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.
- Valuation: What is 58.com 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 58.com is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of 58.com? 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 email@example.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.