Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
The latest earnings announcement China Evergrande Group (HKG:3333) released in April 2019 revealed that the company benefited from a large tailwind, leading to a high double-digit earnings growth of 53%. Below, I've presented key growth figures on how market analysts perceive China Evergrande Group's earnings growth outlook 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.
Analysts' expectations for the coming year seems positive, with earnings growing by a robust 43%. This growth seems to continue into the following year with rates reaching double digit 56% compared to today’s earnings, and finally hitting CN¥69b by 2022.
Even though it is useful to understand the rate of growth year by year relative to today’s level, it may be more beneficial to determine the rate at which the company is rising or falling every year, on average. The benefit of this technique is that we can get a bigger picture of the direction of China Evergrande Group's earnings trajectory over the long run, irrespective of near term fluctuations, 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 18%. This means that, we can presume China Evergrande Group will grow its earnings by 18% every year for the next few years.
For China Evergrande Group, 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 3333 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 3333 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 3333? 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.