Will Greentown Service Group Co. Ltd.’s (HKG:2869) Earnings Grow Over The Next Year?

Based on Greentown Service Group Co. Ltd.’s (HKG:2869) earnings update in June 2018, the consensus outlook from analysts appear fairly confident, as upcoming earnings growth is expected to be 29% next year, similar to the range of average earnings growth for the past five years of 29% per year. Currently with trailing-twelve-month earnings of CN¥387m, we can expect this to reach CN¥500m by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Greentown Service Group in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for Greentown Service Group

How will Greentown Service Group perform in the near future?

Longer term expectations from the 12 analysts covering 2869’s stock is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

SEHK:2869 Future Profit December 23rd 18
SEHK:2869 Future Profit December 23rd 18

By 2021, 2869’s earnings should reach CN¥755m, from current levels of CN¥387m, resulting in an annual growth rate of 20%. This leads to an EPS of CN¥0.30 in the final year of projections relative to the current EPS of CN¥0.14. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 7.5% to 6.6% 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 key aspects you should further research:

  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 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.
  3. 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.