GCL-Poly Energy Holdings Limited’s (SEHK:3800) most recent earnings update in December 2017 suggested that the company experienced a slight headwind with earnings declining from CN¥2.10B to CN¥1.93B, a change of -8.24%. Today I want to provide a brief commentary on how market analysts predict GCL-Poly Energy Holdings’s earnings growth outlook over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. See our latest analysis for GCL-Poly Energy Holdings

Market analysts’ prospects for next year seems optimistic, with earnings increasing by a robust 25.07%. This growth seems to continue into the following year with rates arriving at double digit 34.24% compared to today’s earnings, and finally hitting CN¥2.58B by 2021.

While it is informative understanding the rate of growth each year relative to today’s value, it may be more valuable determining the rate at which the company is growing on average every year. The pro of this method is that we can get a bigger picture of the direction of GCL-Poly Energy Holdings’s earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To compute this rate, I put 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 9.77%. This means, we can expect GCL-Poly Energy Holdings will grow its earnings by 9.77% every year for the next couple of years.

Next Steps:

For GCL-Poly Energy Holdings, I’ve put together three essential aspects 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 3800 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 3800 is currently mispriced by the market.

3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 3800? 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 pass 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.