Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Vtech Holdings Limited’s (HKG:303) announced its latest earnings update in March 2019, which revealed that the business experienced a immense headwind with earnings declining by -17%. Below, I’ve laid out key growth figures on how market analysts view Vtech Holdings’s earnings growth trajectory over the next few 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.
Analysts’ expectations for the coming year seems rather subdued, with earnings expanding by a single digit 5.6%. The growth outlook in the following year seems much more positive with rates arriving at double digit 20% compared to today’s earnings and reduces to US$198m by 2022.
Although it is helpful to understand the growth rate year by year relative to today’s value, it may be more beneficial to analyze the rate at which the business 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 Vtech Holdings’s earnings trajectory over time, fluctuate up and down. To compute this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 6.4%. This means, we can assume Vtech Holdings will grow its earnings by 6.4% every year for the next few years.
For Vtech Holdings, I’ve put together three fundamental factors you should further examine:
- 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.
- Valuation: What is 303 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 303 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 303? 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 firstname.lastname@example.org. 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.
These great dividend stocks are beating your savings account
Not only have these stocks been reliable dividend payers for the last 10 years but with the yield over 3% they are also easily beating your savings account (let alone the possible capital gains). Click here to see them for FREE on Simply Wall St.