What Should Investors Know About UOL Group Limited's (SGX:U14) Earnings Outlook?
UOL Group Limited's (SGX:U14) latest earnings update in December 2018 indicated that the business experienced a major headwind with earnings falling by -51%. Below is a brief commentary on my key takeaways on how market analysts perceive UOL Group's earnings growth trajectory over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
See our latest analysis for UOL Group
Analysts' expectations for this coming year seems pessimistic, with earnings falling by a double-digit -14%. In the following year, earnings begin to improve, but face another decrease in 2022 with earnings arriving at S$404m.
While it’s useful to understand the growth each year relative to today’s figure, it may be more insightful to evaluate the rate at which the earnings are moving every year, on average. The benefit of this method is that we can get a bigger picture of the direction of UOL Group's earnings trajectory over the long run, irrespective of near term fluctuations, fluctuate up and down. To calculate this rate, I've inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is -1.4%. This means that, we can expect UOL Group will chip away at a rate of -1.4% every year for the next couple of years.
Next Steps:
For UOL Group, there are three pertinent 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 U14 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 U14 is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of U14? 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.
