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What Do Analysts Think About Kaisa Group Holdings Ltd.'s (HKG:1638) Earnings Outlook?

Simply Wall St

In April 2019, Kaisa Group Holdings Ltd. (HKG:1638) announced its most recent earnings update, which suggested that the business experienced a immense headwind with earnings declining by -16%. Today I want to provide a brief commentary on how market analysts perceive Kaisa Group Holdings's earnings growth trajectory 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.

Check out our latest analysis for Kaisa Group Holdings

Analysts' expectations for the coming year seems positive, with earnings increasing by a robust 38%. This growth seems to continue into the following year with rates reaching double digit 84% compared to today’s earnings, and finally hitting CN¥6.5b by 2022.

SEHK:1638 Past and Future Earnings, August 9th 2019

Although it’s helpful to be aware of the growth each year relative to today’s value, it may be more valuable gauging the rate at which the earnings are rising or falling every year, on average. The advantage of this approach is that we can get a better picture of the direction of Kaisa Group Holdings's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute 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 28%. This means that, we can anticipate Kaisa Group Holdings will grow its earnings by 28% every year for the next few years.

Next Steps:

For Kaisa Group Holdings, there are three essential aspects you should further research:

  1. 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.
  2. Valuation: What is 1638 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 1638 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1638? 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 editorial-team@simplywallst.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.