In September 2018, Huazhu Group Limited (NASDAQ:HTHT) released its earnings update. Generally, it seems that analyst forecasts are fairly optimistic, as upcoming earnings growth is expected to be 39% next year, similar to the range of average earnings growth for the past five years of 36% per year. Presently, with latest-twelve-month earnings at CN¥1.2b, we should see this growing to CN¥1.7b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Huazhu Group in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Can we expect Huazhu Group to keep growing?
The 13 analysts covering HTHT view its longer term outlook with a 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 understand the overall trajectory of HTHT’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.
By 2022, HTHT’s earnings should reach CN¥2.2b, from current levels of CN¥1.2b, resulting in an annual growth rate of 23%. EPS reaches CN¥7.96 in the final year of forecast compared to the current CN¥4.43 EPS today. With a current profit margin of 15%, this movement will result in a margin of 20% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Huazhu Group, there are three pertinent factors 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 Huazhu Group 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 Huazhu Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Huazhu Group? 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.