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In December 2018, Essex Bio-Technology Limited (HKG:1061) released its earnings update. Generally, the consensus outlook from analysts appear fairly confident, as upcoming earnings growth is expected to be 25% next year, similar to the range of average earnings growth for the past five years of 26% per year. Currently with trailing-twelve-month earnings of HK$231m, we can expect this to reach HK$290m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Essex Bio-Technology in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Check out our latest analysis for Essex Bio-Technology
Can we expect Essex Bio-Technology to keep growing?
The 1 analysts covering 1061 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.
From the current net income level of HK$231m and the final forecast of HK$416m by 2022, the annual rate of growth for 1061’s earnings is 19%. This leads to an EPS of HK$0.72 in the final year of projections relative to the current EPS of HK$0.40. Margins are currently sitting at 20%, approximately the same as previous years. With analysts forecasting revenue growth of 0.76576 and 1061's net income growth expected to roughly track that, this company may add value for shareholders over time.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Essex Bio-Technology, I've put together three pertinent aspects you should further examine:
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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 Essex Bio-Technology 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 Essex Bio-Technology 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 Essex Bio-Technology? 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.