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PAX Global Technology Limited (HKG:327): Will The Growth Last?

Simply Wall St

PAX Global Technology Limited’s (HKG:327) latest earnings announcement in December 2018 signalled that the company experienced a strong tailwind, eventuating to a double-digit earnings growth of 28%. Below, I’ve laid out key growth figures on how market analysts view PAX Global Technology’s earnings growth trajectory over the next couple of 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 PAX Global Technology

Market analysts’ prospects for this coming year seems buoyant, with earnings rising by a robust 11%. This growth seems to continue into the following year with rates arriving at double digit 32% compared to today’s earnings, and finally hitting HK$797m by 2022.

SEHK:327 Past and Future Earnings, March 10th 2019

While it’s useful to understand the rate of growth each year relative to today’s figure, it may be more insightful analyzing the rate at which the earnings are rising or falling every year, on average. The benefit of this method is that we can get a better picture of the direction of PAX Global Technology’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve appended 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 15%. This means that, we can expect PAX Global Technology will grow its earnings by 15% every year for the next few years.

Next Steps:

For PAX Global Technology, I’ve compiled three pertinent 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 327 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 327 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 327? 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.