Based on China Telecom Corporation Limited's (HKG:728) earnings update in March 2019, analysts seem fairly confident, with earnings expected to grow by 6.8% in the upcoming year compared with the past 5-year average growth rate of 2.2%. Currently with trailing-twelve-month earnings of CN¥21b, we can expect this to reach CN¥23b by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for China Telecom in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
What can we expect from China Telecom in the longer term?
The longer term expectations from the 23 analysts of 728 is tilted towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for 728, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 6.8% based on the most recent earnings level of CN¥21b to the final forecast of CN¥26b by 2022. EPS reaches CN¥0.33 in the final year of forecast compared to the current CN¥0.26 EPS today. With a current profit margin of 5.6%, this movement will result in a margin of 6.1% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For China Telecom, I've put together three essential aspects you should further examine:
- 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 Telecom 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 Telecom is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of China Telecom? 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.