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The latest earnings update Nexteer Automotive Group Limited (HKG:1316) released in April 2019 suggested that the company experienced a small tailwind, leading to a single-digit earnings growth of 7.9%. Below, I’ve presented key growth figures on how market analysts perceive Nexteer Automotive Group’s earnings growth trajectory over the next few 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.
Analysts’ outlook for this coming year seems pessimistic, with earnings reducing by -6.6%. Over the medium term, earnings are predicted to continue to be below today’s level, with a decline of -0.5% in 2021, eventually reaching US$378m in 2022.
Although it is helpful to be aware of the growth each year relative to today’s figure, it may be more valuable analyzing the rate at which the business is rising or falling on average every year. The pro of this technique is that we can get a better picture of the direction of Nexteer Automotive Group’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 inserted 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 2.1%. This means, we can assume Nexteer Automotive Group will grow its earnings by 2.1% every year for the next few years.
For Nexteer Automotive Group, there are three key aspects you should further research:
- 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.
- Valuation: What is 1316 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 1316 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1316? 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 firstname.lastname@example.org. 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.