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As China Gas Holdings Limited (HKG:384) announced its earnings release on 31 March 2019, the consensus outlook from analysts appear somewhat bearish, with profits predicted to rise by 18% next year relative to the higher past 5-year average growth rate of 25%. With trailing-twelve-month net income at current levels of HK$8.2b, we should see this rise to HK$9.7b in 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for China Gas Holdings in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Exciting times ahead?
The longer term view from the 21 analysts covering 384 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. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2022, 384's earnings should reach HK$13b, from current levels of HK$8.2b, resulting in an annual growth rate of 12%. This leads to an EPS of HK$2.43 in the final year of projections relative to the current EPS of HK$1.63. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 14% to 13% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For China Gas Holdings, there are three relevant aspects 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 China Gas Holdings 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 China Gas Holdings is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of China Gas Holdings? 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.