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In December 2018, PetroChina Company Limited (HKG:857) announced its latest earnings update, which signalled that the company experienced a substantial tailwind, more than doubling its earnings from the prior year. Below, I've laid out key growth figures on how market analysts view PetroChina's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts' consensus outlook for the coming year seems buoyant, with earnings increasing by a robust 19%. This growth seems to continue into the following year with rates arriving at double digit 24% compared to today’s earnings, and finally hitting CN¥75b by 2022.
Although it’s informative understanding the growth each year relative to today’s figure, it may be more insightful to analyze the rate at which the earnings are growing every year, on average. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of PetroChina's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put 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 10%. This means that, we can presume PetroChina will grow its earnings by 10% every year for the next few years.
For PetroChina, there are three pertinent factors 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 857 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 857 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 857? 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.