Bosideng International Holdings Limited's (HKG:3998) most recent earnings announcement in July 2019 showed that the business experienced a large tailwind, leading to a high double-digit earnings growth of 59%. Today I want to provide a brief commentary on how market analysts perceive Bosideng International Holdings's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts' consensus outlook for next year seems positive, with earnings climbing by a robust 33%. This growth seems to continue into the following year with rates arriving at double digit 65% compared to today’s earnings, and finally hitting CN¥2.0b by 2022.
Even though it is useful to understand the growth rate each year relative to today’s value, it may be more valuable estimating the rate at which the earnings are moving every year, on average. The pro of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Bosideng International Holdings's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've inserted 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 22%. This means that, we can assume Bosideng International Holdings will grow its earnings by 22% every year for the next few years.
For Bosideng International Holdings, there are three fundamental 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 3998 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 3998 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 3998? 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.