In This Article:
China Galaxy Securities Co Ltd.’s (SEHK:6881) latest earnings update in December 2017 indicated that the business faced a significant headwind with earnings declining by -22.76%. Investors may find it useful to understand how market analysts view China Galaxy Securities’s earnings growth outlook over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. Check out our latest analysis for China Galaxy Securities
Analysts’ outlook for next year seems optimistic, with earnings expanding by a robust 23.20%. This growth seems to continue into the following year with rates arriving at double digit 35.52% compared to today’s earnings and reduces to CN¥5.24B by 2021.
While it’s helpful to be aware of the rate of growth each year relative to today’s value, it may be more valuable to estimate the rate at which the company is growing every year, on average. The advantage of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of China Galaxy Securities’s earnings trajectory over time, fluctuate up and down. To calculate this rate, I’ve inserted 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 10.89%. This means, we can presume China Galaxy Securities will grow its earnings by 10.89% every year for the next couple of years.
Next Steps:
For China Galaxy Securities, there are three relevant aspects you should further research:
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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 6881 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 6881 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 6881? 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.