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Looking at Nameson Holdings Limited’s (HKG:1982) earnings update in March 2018, analyst consensus outlook appear cautiously optimistic, with profits predicted to increase by 17% next year relative to the past 5-year average growth rate of 6.2%. With trailing-twelve-month net income at current levels of HK$327m, we should see this rise to HK$383m in 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
See our latest analysis for Nameson Holdings
Can we expect Nameson Holdings to keep growing?
Over the next three years, it seems the consensus view of the 7 analysts covering 1982 is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for 1982, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of HK$327m and the final forecast of HK$455m by 2021, the annual rate of growth for 1982’s earnings is 12%. EPS reaches HK$0.20 in the final year of forecast compared to the current HK$0.15 EPS today. Earnings growth appears to be a result of top-line expansion of 12%, dropping down to the bottome-line. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 9.5% to 9.0% by the end of 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Nameson Holdings, there are three essential factors you should further examine:
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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 Nameson 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 Nameson Holdings 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 Nameson 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!
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.