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Yue Yuen Industrial (Holdings) Limited (HKG:551): Poised For Long Term Success?

Simply Wall St

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Looking at Yue Yuen Industrial (Holdings) Limited's (HKG:551) earnings update in March 2019, analysts seem cautiously optimistic, as a 28% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of 1.9%. Presently, with latest-twelve-month earnings at US$307m, we should see this growing to US$394m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

See our latest analysis for Yue Yuen Industrial (Holdings)

Exciting times ahead?

The longer term expectations from the 7 analysts of 551 is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around 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 551's earnings growth over these next few years.

SEHK:551 Past and Future Earnings, July 3rd 2019

From the current net income level of US$307m and the final forecast of US$485m by 2022, the annual rate of growth for 551’s earnings is 12%. EPS reaches $0.27 in the final year of forecast compared to the current $0.19 EPS today. In 2022, 551's profit margin will have expanded from 3.2% to 4.5%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Yue Yuen Industrial (Holdings), I've compiled three fundamental 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 Yue Yuen Industrial (Holdings) 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 Yue Yuen Industrial (Holdings) is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Yue Yuen Industrial (Holdings)? 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.