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Looking at mm2 Asia Ltd.'s (SGX:1B0) earnings update on 31 March 2019, the consensus outlook from analysts appear somewhat bearish, with profits predicted to rise by 9.4% next year compared with the higher past 5-year average growth rate of 36%. By 2020, we can expect mm2 Asia’s bottom line to reach S$21m, a jump from the current trailing-twelve-month of S$19m. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for mm2 Asia in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How will mm2 Asia perform in the near future?
The 3 analysts covering 1B0 view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of 1B0's earnings growth over these next few years.
From the current net income level of S$19m and the final forecast of S$30m by 2022, the annual rate of growth for 1B0’s earnings is 16%. This leads to an EPS of SGD0.026 in the final year of projections relative to the current EPS of SGD0.016. In 2022, 1B0's profit margin will have expanded from 7.2% to 9.2%.
Future outlook is only one aspect when you're building an investment case for a stock. For mm2 Asia, I've compiled three important aspects 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 mm2 Asia 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 mm2 Asia is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of mm2 Asia? 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 firstname.lastname@example.org. 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.