Since Best World International Limited (SGX:CGN) released its earnings in December 2017, it seems that analyst expectations are fairly bearish, with earnings expected to grow by 14.06% in the upcoming year relative to the higher past 5-year average growth rate of 55.69%. Presently, with earnings at S$55.67M, we should see this growing to S$63.50M by 2019. Below is a brief commentary around Best World International’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here. See our latest analysis for Best World International

How will Best World International perform in the near future?

The 4 analysts covering CGN view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. 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 14.74% based on the most recent earnings level of S$55.67M to the final forecast of S$87.92M by 2021. EPS reaches SGD0.16 in the final year of forecast compared to the current SGD0.1 EPS today. Growth in the bottom line seems to suggest reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. In 2021, CGN’s profit margin will have expanded from 25.21% to 25.26%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Best World International, I’ve put together three essential factors 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 Best World International 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 Best World International is currently mispriced by the market.

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