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Looking at Lenovo Group Limited's (HKG:992) earnings update on 31 March 2019, it seems that analyst forecasts are fairly optimistic, with earnings expected to grow by 34% in the upcoming year relative to the past 5-year average growth rate of -27%. Currently with trailing-twelve-month earnings of US$596m, we can expect this to reach US$796m by 2020. Below is a brief commentary around Lenovo Group's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.
See our latest analysis for Lenovo Group
Can we expect Lenovo Group to keep growing?
Over the next three years, it seems the consensus view of the 20 analysts covering 992 is skewed towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of 992's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 19% based on the most recent earnings level of US$596m to the final forecast of US$1.1b by 2022. This leads to an EPS of $0.095 in the final year of projections relative to the current EPS of $0.050. In 2022, 992's profit margin will have expanded from 1.2% to 1.9%.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Lenovo Group, I've put together three fundamental aspects 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 Lenovo 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 Lenovo 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 Lenovo 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!
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.