Powerlong Real Estate Holdings Limited’s (HKG:1238) latest earnings update in April 2019 confirmed that the company endured a major headwind with earnings deteriorating by -15%. Today I want to provide a brief commentary on how market analysts view Powerlong Real Estate Holdings’s earnings growth trajectory over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts’ prospects for the upcoming year seems optimistic, with earnings increasing by a robust 10%. This growth seems to continue into the following year with rates reaching double digit 44% compared to today’s earnings, and finally hitting CN¥4.9b by 2022.
Although it is helpful to understand the rate of growth year by year relative to today’s figure, it may be more valuable to determine the rate at which the business is rising or falling every year, on average. The benefit of this method is that we can get a better picture of the direction of Powerlong Real Estate Holdings’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 20%. This means that, we can assume Powerlong Real Estate Holdings will grow its earnings by 20% every year for the next few years.
For Powerlong Real Estate Holdings, I’ve put together three relevant 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 1238 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 1238 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1238? 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 email@example.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.