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China Education Group Holdings Limited's (HKG:839) latest earnings announcement in August 2018 signalled that the company gained from a strong tailwind, leading to a double-digit earnings growth of 31%. Below, I've laid out key numbers on how market analysts perceive China Education Group Holdings's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
View our latest analysis for China Education Group Holdings
Market analysts' consensus outlook for the coming year seems optimistic, with earnings expanding by a robust 39%. This growth seems to continue into the following year with rates reaching double digit 82% compared to today’s earnings, and finally hitting CN¥1.2b by 2022.
Although it is informative knowing the rate of growth year by year relative to today’s figure, it may be more beneficial to estimate the rate at which the company is rising or falling every year, on average. The advantage of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of China Education Group Holdings's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put 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 23%. This means that, we can anticipate China Education Group Holdings will grow its earnings by 23% every year for the next couple of years.
Next Steps:
For China Education Group Holdings, I've compiled three fundamental factors you should look at:
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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.
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Valuation: What is 839 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 839 is currently mispriced by the market.
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Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 839? 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.