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Based on Autohome Inc.'s (NYSE:ATHM) earnings update in March 2019, analysts seem cautiously optimistic, as a 22% increase in profits is expected in the upcoming year, though this is noticeably lower than the past 5-year average earnings growth of 33%. Currently with trailing-twelve-month earnings of CN¥2.9b, we can expect this to reach CN¥3.5b by 2020. Below is a brief commentary on the longer term outlook the market has for Autohome. For those interested in more of an analysis of the company, you can research its fundamentals here.
Can we expect Autohome to keep growing?
The longer term view from the 12 analysts covering ATHM is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. 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 CN¥2.9b and the final forecast of CN¥4.9b by 2022, the annual rate of growth for ATHM’s earnings is 15%. This leads to an EPS of CN¥42.83 in the final year of projections relative to the current EPS of CN¥24.4. Margins are currently sitting at 40%, approximately the same as previous years. With analysts forecasting revenue growth of 0.68891 and ATHM'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 Autohome, I've put together three essential factors you should further research:
- 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 Autohome 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 Autohome is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Autohome? 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.