In December 2018, Giordano International Limited (HKG:709) released its most recent earnings announcement, which indicated that the company experienced a slight headwind with earnings declining from HK$500m to HK$480m, a change of -4.0%. Below, I’ve laid out key numbers on how market analysts view Giordano International’s earnings growth outlook over the next couple of 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.
Analysts’ expectations for the coming year seems pessimistic, with earnings falling by -4.0%. But in the following year, there is a complete contrast in performance, with generating double digit 4.2% compared to today’s level and continues to increase to HK$520m in 2022.
Even though it is informative knowing the growth rate year by year relative to today’s level, it may be more valuable to evaluate the rate at which the business is growing every year, on average. The advantage of this approach is that we can get a better picture of the direction of Giordano International’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 the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 3.7%. This means that, we can anticipate Giordano International will grow its earnings by 3.7% every year for the next couple of years.
For Giordano International, there are three pertinent 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 709 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 709 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 709? 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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.