LexinFintech Holdings Ltd.'s (NASDAQ:LX) announced its latest earnings update in December 2018, which revealed that the company benefited from a major tailwind, more than doubling its earnings from the prior year. Below, I've laid out key growth figures on how market analysts perceive LexinFintech Holdings's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. 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.
Analysts' outlook for this coming year seems optimistic, with earnings increasing by a robust 23%. This growth seems to continue into the following year with rates reaching double digit 35% compared to today’s earnings, and finally hitting CN¥3.9b by 2022.
Even though it is useful to understand the growth rate each year relative to today’s level, it may be more valuable gauging the rate at which the company is rising or falling every year, on average. The advantage of this approach is that we can get a better picture of the direction of LexinFintech Holdings'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've appended 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 17%. This means that, we can expect LexinFintech Holdings will grow its earnings by 17% every year for the next few years.
For LexinFintech Holdings, I've compiled three pertinent factors you should look at:
- 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 LX 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 LX is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of LX? 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 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.