Cowell e Holdings Inc. (HKG:1415): Is It A Good Long Term Opportunity?

Cowell e Holdings Inc.’s (HKG:1415) latest earnings update in December 2018 showed that the company faced a significant headwind with earnings falling by -50%. Today I want to provide a brief commentary on how market analysts predict Cowell e Holdings’s earnings growth outlook over the next couple of years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

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View our latest analysis for Cowell e Holdings

Analysts’ expectations for next year seems buoyant, with earnings climbing by a robust 35%. This growth seems to continue into the following year with rates reaching double digit 38% compared to today’s earnings, and finally hitting US$21m by 2022.

SEHK:1415 Past and Future Earnings, May 22nd 2019
SEHK:1415 Past and Future Earnings, May 22nd 2019

While it’s informative understanding the rate of growth each year relative to today’s figure, it may be more valuable gauging the rate at which the company is rising or falling every year, on average. The pro of this method is that we can get a better picture of the direction of Cowell e 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 inserted 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 11%. This means, we can anticipate Cowell e Holdings will grow its earnings by 11% every year for the next couple of years.

Next Steps:

For Cowell e Holdings, I’ve compiled three important factors you should further examine:

  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 1415 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 1415 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1415? 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.