What Should We Expect From Vtech Holdings Limited's (HKG:303) Earnings In The Next 12 Months?

Simply Wall St

On 31 March 2019, Vtech Holdings Limited (HKG:303) announced its earnings update. Overall, analyst consensus outlook appear cautiously optimistic, as a 5.6% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of -1.5%. By 2020, we can expect Vtech Holdings’s bottom line to reach US$181m, a jump from the current trailing-twelve-month of US$171m. Below is a brief commentary around Vtech Holdings'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.

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See our latest analysis for Vtech Holdings

Can we expect Vtech Holdings to keep growing?

The longer term expectations from the 4 analysts of 303 is tilted towards the 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 303, 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.

SEHK:303 Past and Future Earnings, May 22nd 2019

From the current net income level of US$171m and the final forecast of US$198m by 2022, the annual rate of growth for 303’s earnings is 6.4%. This leads to an EPS of $0.79 in the final year of projections relative to the current EPS of $0.68. In 2022, 303's profit margin will have expanded from 7.9% to 8.4%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Vtech Holdings, I've put together three essential aspects you should further examine:

  1. 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.
  2. Valuation: What is Vtech Holdings 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 Vtech Holdings is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Vtech Holdings? 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 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.