What Should We Expect From Li Ning Company Limited’s (HKG:2331) Earnings Over The Next Year?
After Li Ning Company Limited’s (HKG:2331) earnings announcement in June 2018, the consensus outlook from analysts appear fairly confident, as a 38% increase in profits is expected in the upcoming year, though this is noticeably lower than the previous 5-year average earnings growth of 74%. Currently with trailing-twelve-month earnings of CN¥515m, we can expect this to reach CN¥709m by 2020. Below is a brief commentary on the longer term outlook the market has for Li Ning. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
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Can we expect Li Ning to keep growing?
Over the next three years, it seems the consensus view of the 24 analysts covering 2331 is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for 2331, 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.
By 2022, 2331’s earnings should reach CN¥1.1b, from current levels of CN¥515m, resulting in an annual growth rate of 23%. EPS reaches CN¥0.50 in the final year of forecast compared to the current CN¥0.21 EPS today. With a current profit margin of 5.8%, this movement will result in a margin of 8.2% by 2022.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Li Ning, there are three essential factors 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 Li Ning 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 Li Ning is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Li Ning? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
