On 30 June 2019, Hollysys Automation Technologies Ltd. (NASDAQ:HOLI) released its earnings update. Generally, analyst consensus outlook appear cautiously optimistic, with earnings expected to grow by 18% in the upcoming year relative to the past 5-year average growth rate of 6.5%. Currently with trailing-twelve-month earnings of US$125m, we can expect this to reach US$148m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
What can we expect from Hollysys Automation Technologies in the longer term?
The longer term expectations from the 5 analysts of HOLI 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. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of HOLI's earnings growth over these next few years.
This results in an annual growth rate of 11% based on the most recent earnings level of US$125m to the final forecast of US$171m by 2022. EPS reaches $2.74 in the final year of forecast compared to the current $2.07 EPS today. Margins are currently sitting at 22%, approximately the same as previous years. With analysts forecasting revenue growth of 0.37425 and HOLI's net income growth expected to roughly track that, this company may add value for shareholders over time.
Future outlook is only one aspect when you're building an investment case for a stock. For Hollysys Automation Technologies, there are three relevant factors you should look at:
- 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 Hollysys Automation Technologies 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 Hollysys Automation Technologies is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Hollysys Automation Technologies? 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.