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WH Group Limited's (HKG:288) latest earnings announcement in December 2018 revealed that the company endured a substantial headwind with earnings deteriorating by -17%. Below, I've laid out key growth figures on how market analysts predict WH Group's earnings growth trajectory 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.
View our latest analysis for WH Group
Analysts' expectations for this coming year seems optimistic, with earnings increasing by a robust 33%. This growth seems to continue into the following year with rates reaching double digit 47% compared to today’s earnings, and finally hitting US$1.5b by 2022.
Although it’s useful to be aware of the growth year by year relative to today’s value, it may be more beneficial analyzing the rate at which the company is growing every year, on average. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of WH Group's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've appended 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 14%. This means that, we can expect WH Group will grow its earnings by 14% every year for the next few years.
Next Steps:
For WH Group, I've put together three key aspects you should look at:
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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 288 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 288 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 288? 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.