The most recent earnings announcement CEI Limited’s (SGX:AVV) released in December 2018 signalled that the business benefited from a strong tailwind, leading to a double-digit earnings growth of 14%. Below, I’ve laid out key numbers on how market analysts predict CEI’s earnings growth outlook 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 CEI
Market analysts’ prospects for next year seems rather muted, with earnings growing by a single digit 7.5%. The growth outlook in the following year seems much more positive with rates generating double digit 13% compared to today’s earnings, and finally hitting S$8.9m by 2022.
While it is helpful to be aware of the growth rate year by year relative to today’s value, it may be more beneficial to analyze the rate at which the earnings are moving on average every year. The pro of this approach is that we can get a better picture of the direction of CEI’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 the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 5.8%. This means that, we can anticipate CEI will grow its earnings by 5.8% every year for the next couple of years.
Next Steps:
For CEI, I’ve compiled three key factors you should further examine:
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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.
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Valuation: What is AVV 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 AVV is currently mispriced by the market.
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Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of AVV? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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