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In December 2018, Beijing Tong Ren Tang Chinese Medicine Company Limited (HKG:3613) announced its earnings update. Overall, analyst forecasts appear to be in-line with historical trends, with earnings growth rate expected to be 16% in the upcoming year, relative to the past five-year average earnings growth of 17% per year. With trailing-twelve-month net income at current levels of HK$581m, we should see this rise to HK$671m in 2020. Below is a brief commentary on the longer term outlook the market has for Beijing Tong Ren Tang Chinese Medicine. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect Beijing Tong Ren Tang Chinese Medicine to keep growing?
The view from 3 analysts over the next three years is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. 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 3613's earnings growth over these next few years.
This results in an annual growth rate of 14% based on the most recent earnings level of HK$581m to the final forecast of HK$885m by 2022. This leads to an EPS of HK$1.06 in the final year of projections relative to the current EPS of HK$0.69. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 38% to 38% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Beijing Tong Ren Tang Chinese Medicine, I've put together three fundamental factors you should look at:
- 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 Beijing Tong Ren Tang Chinese Medicine 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 Beijing Tong Ren Tang Chinese Medicine is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Beijing Tong Ren Tang Chinese Medicine? 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 email@example.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.