Yahoo Finance NagaCorp Ltd. (HKG:3918): Immense Growth Potential?
The latest earnings update NagaCorp Ltd. (HKG:3918) released in December 2018 indicated that the business experienced a strong tailwind, eventuating to a high double-digit earnings growth of 53%. Below is a brief commentary on my key takeaways on how market analysts predict NagaCorp’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
See our latest analysis for NagaCorp
Market analysts’ prospects for this coming year seems positive, with earnings increasing by a robust 16%. This growth seems to continue into the following year with rates arriving at double digit 28% compared to today’s earnings, and finally hitting US$586m by 2022.
Even though it’s informative knowing the growth rate year by year relative to today’s level, it may be more valuable evaluating the rate at which the earnings are growing every year, on average. The advantage of this technique is that we can get a better picture of the direction of NagaCorp’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate 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 13%. This means, we can presume NagaCorp will grow its earnings by 13% every year for the next few years.
Next Steps:
For NagaCorp, there are three pertinent 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 3918 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 3918 is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 3918? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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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.
