U.S. Markets closed

China Shineway Pharmaceutical Group Limited (HKG:2877): Are Analysts Bullish?

Simply Wall St

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

In December 2018, China Shineway Pharmaceutical Group Limited (HKG:2877) announced its latest earnings update, which revealed that the business experienced a robust tailwind, eventuating to a double-digit earnings growth of 12%. Below is a brief commentary on my key takeaways on how market analysts perceive China Shineway Pharmaceutical Group's earnings growth outlook over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

View our latest analysis for China Shineway Pharmaceutical Group

Analysts' expectations for this coming year seems buoyant, with earnings expanding by a robust 11%. This growth seems to continue into the following year with rates arriving at double digit 38% compared to today’s earnings, and finally hitting CN¥784m by 2022.

SEHK:2877 Past and Future Earnings, June 17th 2019

While it is useful to understand the growth rate year by year relative to today’s value, it may be more insightful to evaluate the rate at which the business is moving on average every year. The pro of this approach is that we can get a better picture of the direction of China Shineway Pharmaceutical Group's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I've appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 15%. This means that, we can presume China Shineway Pharmaceutical Group will grow its earnings by 15% every year for the next few years.

Next Steps:

For China Shineway Pharmaceutical Group, I've put together three key factors you should look at:

  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 2877 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 2877 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 2877? 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.