In This Article:
After Greentown Service Group Co Ltd’s (HKG:2869) earnings announcement in June 2018, analysts seem fairly confident, with earnings growth rate expected to be 31% next year, which is within range of the past five-year average earnings growth of 29%. With trailing-twelve-month net income at current levels of CN¥387m, we should see this rise to CN¥509m in 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
View our latest analysis for Greentown Service Group
What can we expect from Greentown Service Group in the longer term?
The view from 12 analysts over the next three years is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for 2869, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 20% based on the most recent earnings level of CN¥387m to the final forecast of CN¥771m by 2021. EPS reaches CN¥0.31 in the final year of forecast compared to the current CN¥0.14 EPS today. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 7.5% to 6.7% by the end of 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Greentown Service Group, I’ve put together three pertinent factors you should look at:
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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 Greentown Service Group 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 Greentown Service Group 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 Greentown Service Group? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.