In This Article:
As NWS Holdings Limited (HKG:659) released its latest earnings announcement on 30 June 2018, it seems that analyst forecasts are fairly bearish, with earnings expected to decline by -8.1% in the upcoming year against the past 5-year average growth rate of 8.1%. Currently with a railing-twelve-month profit of HK$6.1b, the consensus growth rate suggests that earnings will drop to HK$5.6b by 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.
Check out our latest analysis for NWS Holdings
Can we expect NWS Holdings to keep growing?
Longer term expectations from the 1 analysts covering 659’s stock 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 get an idea of the overall earnings growth trend for 659, 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.
This results in an annual growth rate of 6.6% based on the most recent earnings level of HK$6.1b to the final forecast of HK$7.2b by 2021. This leads to an EPS of HK$1.85 in the final year of projections relative to the current EPS of HK$1.56. Growth in earnings appears to be a result of revenue expansion of 17% exceeeding cost growth over time. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 17% to 12% by the end of 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For NWS Holdings, I’ve put together three important 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 NWS 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 NWS 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 NWS 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.