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What Should Investors Know About TK Group (Holdings) Limited's (HKG:2283) Future?

Simply Wall St

In April 2019, TK Group (Holdings) Limited (HKG:2283) released its most recent earnings announcement, which signalled that the company gained from a strong tailwind, eventuating to a double-digit earnings growth of 16%. Today I want to provide a brief commentary on how market analysts perceive TK Group (Holdings)'s earnings growth outlook over the next few 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.

See our latest analysis for TK Group (Holdings)

Analysts' expectations for this coming year seems rather muted, with earnings expanding by a single digit 4.3%. The growth outlook in the following year seems much more positive with rates arriving at double digit 24% compared to today’s earnings, and finally hitting HK$499m by 2022.

SEHK:2283 Past and Future Earnings, August 5th 2019

Although it’s useful to be aware of the rate of growth each year relative to today’s figure, it may be more valuable to evaluate the rate at which the earnings are moving on average every year. The pro of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of TK Group (Holdings)'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 the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 12%. This means that, we can assume TK Group (Holdings) will grow its earnings by 12% every year for the next few years.

Next Steps:

For TK Group (Holdings), I've put together three key aspects you should further examine:

  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 2283 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 2283 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 2283? 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.