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How Do Analysts See Weichai Power Co., Ltd. (HKG:2338) Performing In The Next Couple Of Years?

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In December 2018, Weichai Power Co., Ltd. (HKG:2338) released its most recent earnings announcement, which showed that the business benefited from a strong tailwind, eventuating to a double-digit earnings growth of 27%. Below, I've laid out key growth figures on how market analysts perceive Weichai Power'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.

See our latest analysis for Weichai Power

Analysts' outlook for this coming year seems rather subdued, with earnings expanding by a single digit 6.8%. However, the following year seems to show a contrast, with earnings decreasing by -2.1%. This volatility continues into the final year of forecast, with earnings arriving at CN¥11b.

SEHK:2338 Past and Future Earnings, March 26th 2019
SEHK:2338 Past and Future Earnings, March 26th 2019

Although it is informative understanding the growth year by year relative to today’s figure, it may be more valuable estimating the rate at which the business is growing on average every year. The pro of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Weichai Power's earnings trajectory over time, fluctuate up and down. 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 0.6%. This means, we can anticipate Weichai Power will grow its earnings by 0.6% every year for the next few years.

Next Steps:

For Weichai Power, I've compiled three important aspects you should further examine:

  1. 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.

  2. Valuation: What is 2338 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 2338 is currently mispriced by the market.

  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 2338? 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.