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Will BOC Aviation Limited's (HKG:2588) Earnings Grow In The Next 12 Months?

Simply Wall St

Based on BOC Aviation Limited's (HKG:2588) earnings update in December 2018, it seems that analyst expectations are fairly bearish, with profits predicted to rise by 11% next year compared with the higher past 5-year average growth rate of 19%. Presently, with latest-twelve-month earnings at US$620m, we should see this growing to US$687m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.

Check out our latest analysis for BOC Aviation

How is BOC Aviation going to perform in the near future?

Longer term expectations from the 10 analysts covering 2588’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of 2588's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

SEHK:2588 Past and Future Earnings, August 16th 2019

By 2022, 2588's earnings should reach US$851m, from current levels of US$620m, resulting in an annual growth rate of 10%. This leads to an EPS of $1.23 in the final year of projections relative to the current EPS of $0.89. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 38% to 35% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For BOC Aviation, there are three key aspects you should further research:

  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 BOC Aviation 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 BOC Aviation is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BOC Aviation? 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.