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Yue Yuen Industrial (Holdings) Limited's (HKG:551) latest earnings announcement in December 2018 revealed that the business faced a substantial headwind with earnings declining by -41%. Today I want to provide a brief commentary on how market analysts view Yue Yuen Industrial (Holdings)'s earnings growth outlook over the next few years and whether the future looks brighter. 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 next year seems positive, with earnings growing by a robust 40%. This growth seems to continue into the following year with rates reaching double digit 58% compared to today’s earnings, and finally hitting US$526m by 2022.
Although it is informative understanding the growth rate year by year relative to today’s level, it may be more beneficial to analyze the rate at which the earnings are rising or falling 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 Yue Yuen Industrial (Holdings)'s earnings trajectory over time, which may be more relevant for long term investors. To compute 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 15%. This means that, we can expect Yue Yuen Industrial (Holdings) will grow its earnings by 15% every year for the next couple of years.
For Yue Yuen Industrial (Holdings), there are three essential aspects you should further research:
- 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 551 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 551 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 551? 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.