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Looking at Vipshop Holdings Limited’s (NYSE:VIPS) earnings update on 31 March 2019, analyst consensus outlook appear cautiously subdued, as a 15% rise in profits is expected in the upcoming year, against the higher past 5-year average growth rate of 22%. With trailing-twelve-month net income at current levels of CN¥2.1b, we should see this rise to CN¥2.5b in 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Vipshop Holdings in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
What can we expect from Vipshop Holdings in the longer term?
The longer term view from the 22 analysts covering VIPS is one of 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 VIPS’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 17% based on the most recent earnings level of CN¥2.1b to the final forecast of CN¥3.6b by 2022. This leads to an EPS of CN¥5.19 in the final year of projections relative to the current EPS of CN¥3.22. In 2022, VIPS’s profit margin will have expanded from 2.5% to 3.7%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Vipshop Holdings, there are three pertinent factors you should further examine:
- 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 Vipshop Holdings 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 Vipshop Holdings is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Vipshop Holdings? 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.