Based on West China Cement Limited's (HKG:2233) earnings update in December 2018, analyst consensus outlook appear cautiously optimistic, as a 23% increase in profits is expected in the upcoming year, though this is evidently lower than the past 5-year average earnings growth of 44%. Currently with trailing-twelve-month earnings of CN¥1.2b, we can expect this to reach CN¥1.4b by 2020. Below is a brief commentary on the longer term outlook the market has for West China Cement. For those interested in more of an analysis of the company, you can research its fundamentals here.
How will West China Cement perform in the near future?
The longer term view from the 4 analysts covering 2233 is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of 2233's earnings growth over these next few years.
This results in an annual growth rate of 4.6% based on the most recent earnings level of CN¥1.2b to the final forecast of CN¥1.4b by 2022. This leads to an EPS of CN¥0.26 in the final year of projections relative to the current EPS of CN¥0.21. With a current profit margin of 20%, this movement will result in a margin of 24% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For West China Cement, I've put together three important aspects 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 West China Cement 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 West China Cement is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of West China Cement? 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.