After Galaxy Entertainment Group Limited’s (SEHK:27) earnings announcement in December 2017, it seems that analyst forecasts are fairly optimistic, with profits predicted to increase by 22.02% next year against the past 5-year average growth rate of 9.10%. Currently with earnings of HK$10.50B, we can expect this to reach HK$12.82B by 2019. Below is a brief commentary on the longer term outlook the market has for Galaxy Entertainment Group. Investors wanting to learn more about other aspects of the company should research its fundamentals here. Check out our latest analysis for Galaxy Entertainment Group

Exciting times ahead?

The longer term expectations from the 22 analysts of 27 is tilted towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

This results in an annual growth rate of 10.88% based on the most recent earnings level of HK$10.50B to the final forecast of HK$15.98B by 2021. This leads to an EPS of HK$3.71 in the final year of projections relative to the current EPS of HK$2.45. The primary reason for earnings growth is due to cost cutting activities, as revenues is expected to grow much slower than earnings. In 2021, 27’s profit margin will have expanded from 16.82% to 18.39%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Galaxy Entertainment Group, I’ve put together three key factors 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 Galaxy Entertainment Group 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 Galaxy Entertainment Group is currently mispriced by the market.

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