Greentown Service Group Co. Ltd.'s (HKG:2869) most recent earnings update in April 2019 suggested that the company benefited from a robust tailwind, eventuating to a double-digit earnings growth of 25%. Below is a brief commentary on my key takeaways on how market analysts predict Greentown Service Group's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts' prospects for the upcoming year seems buoyant, with earnings increasing by a robust 16%. This growth seems to continue into the following year with rates arriving at double digit 58% compared to today’s earnings, and finally hitting CN¥1.0b by 2022.
Although it’s helpful to be aware of the growth each year relative to today’s level, it may be more beneficial to estimate the rate at which the earnings are rising or falling on average every year. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of Greentown Service Group's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've appended 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 24%. This means that, we can anticipate Greentown Service Group will grow its earnings by 24% every year for the next few years.
For Greentown Service Group, I've put together three important aspects 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 2869 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 2869 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 2869? 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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