Since 58.com Inc. (NYSE:WUBA) released its earnings in September 2018, analysts seem cautiously optimistic, with earnings expected to grow by 30% in the upcoming year, though this is evidently lower than the past 5-year average earnings growth of 38%. Presently, with latest-twelve-month earnings at CN¥1.3b, we should see this growing to CN¥1.7b by 2019. Below is a brief commentary around 58.com’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect 58.com to keep growing?
The longer term view from the 16 analysts covering WUBA is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for WUBA, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
By 2021, WUBA’s earnings should reach CN¥2.8b, from current levels of CN¥1.3b, resulting in an annual growth rate of 25%. This leads to an EPS of CN¥28.46 in the final year of projections relative to the current EPS of CN¥8.82. With a current profit margin of 13%, this movement will result in a margin of 18% by 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For 58.com, I’ve put together three fundamental aspects 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 58.com 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 58.com is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of 58.com? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.