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Xtep International Holdings Limited (HKG:1368): What Does The Future Look Like?

Simply Wall St

The most recent earnings release Xtep International Holdings Limited's (HKG:1368) announced in March 2019 signalled that the company gained from a large tailwind, leading to a high double-digit earnings growth of 61%. Below, I've laid out key numbers on how market analysts perceive Xtep International Holdings's earnings growth outlook over the next couple of 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.

View our latest analysis for Xtep International Holdings

Analysts' outlook for next year seems optimistic, with earnings rising by a robust 21%. This growth seems to continue into the following year with rates arriving at double digit 41% compared to today’s earnings, and finally hitting CN¥1.1b by 2022.

SEHK:1368 Past and Future Earnings, August 16th 2019

Even though it’s useful to understand the rate of growth year by year relative to today’s value, it may be more insightful to evaluate the rate at which the earnings are rising or falling on average every year. The advantage of this approach is that we can get a better picture of the direction of Xtep International Holdings's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I put 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 16%. This means, we can assume Xtep International Holdings will grow its earnings by 16% every year for the next few years.

Next Steps:

For Xtep International Holdings, I've compiled three pertinent aspects you should look at:

  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 1368 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 1368 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1368? 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.