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In December 2018, China Galaxy Securities Co., Ltd. (HKG:6881) released its earnings update. Generally, analysts seem highly optimistic, as a 50% rise in profits is expected in the upcoming year, compared with the historical 5-year average growth rate of -1.9%. Currently with trailing-twelve-month earnings of CN¥2.9b, we can expect this to reach CN¥4.3b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

Check out our latest analysis for China Galaxy Securities

Can we expect China Galaxy Securities to keep growing?

Longer term expectations from the 8 analysts covering 6881’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. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of 6881's earnings growth over these next few years.

This results in an annual growth rate of 19% based on the most recent earnings level of CN¥2.9b to the final forecast of CN¥5.3b by 2022. This leads to an EPS of CN¥0.50 in the final year of projections relative to the current EPS of CN¥0.28. Margins are currently sitting at 29%, which is expected to expand to 39% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For China Galaxy Securities, I've put together three important aspects you should further research:

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 China Galaxy Securities 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 China Galaxy Securities is currently mispriced by the market.

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