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What Should Investors Know About Weibo Corporation's (NASDAQ:WB) Future?

Simply Wall St

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The most recent earnings update Weibo Corporation's (NASDAQ:WB) released in December 2018 showed that the company experienced a large tailwind, leading to a high double-digit earnings growth of 62%. Investors may find it useful to understand how market analysts predict Weibo's earnings growth trajectory over the next few 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.

Check out our latest analysis for Weibo

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 reaching double digit 41% compared to today’s earnings, and finally hitting US$993m by 2022.

NasdaqGS:WB Past and Future Earnings, March 27th 2019

While it’s helpful to be aware of the rate of growth year by year relative to today’s figure, it may be more valuable analyzing the rate at which the company is moving on average every year. The advantage of this method is that it ignores near term flucuations and accounts for the overarching direction of Weibo's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put 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 16%. This means that, we can presume Weibo will grow its earnings by 16% every year for the next couple of years.

Next Steps:

For Weibo, there are three fundamental 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 WB 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 WB is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of WB? 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.