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In April 2019, Virscend Education Company Limited (HKG:1565) released its latest earnings announcement, which suggested that the business gained from a robust tailwind, leading to a double-digit earnings growth of 16%. Investors may find it useful to understand how market analysts perceive Virscend Education'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.
Market analysts' consensus outlook for this coming year seems optimistic, with earnings growing by a robust 43%. This growth seems to continue into the following year with rates arriving at double digit 97% compared to today’s earnings, and finally hitting CN¥890m by 2022.
While it is helpful to be aware of the growth rate each year relative to today’s value, it may be more insightful to analyze the rate at which the business is growing on average every year. The pro of this method is that we can get a better picture of the direction of Virscend Education'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 inserted 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 29%. This means that, we can presume Virscend Education will grow its earnings by 29% every year for the next few years.
For Virscend Education, there are three pertinent factors you should further examine:
- 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 1565 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 1565 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1565? 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.