Based on Towngas China Company Limited's (HKG:1083) earnings update on 30 June 2019, the consensus outlook from analysts appear fairly confident, with earnings expected to grow by 15% in the upcoming year compared with the past 5-year average growth rate of 6.9%. Currently with trailing-twelve-month earnings of HK$1.2b, we can expect this to reach HK$1.4b by 2020. Below is a brief commentary around Towngas China's earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How will Towngas China perform in the near future?
The longer term view from the 11 analysts covering 1083 is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. 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.
This results in an annual growth rate of 10% based on the most recent earnings level of HK$1.2b to the final forecast of HK$1.8b by 2022. This leads to an EPS of HK$0.61 in the final year of projections relative to the current EPS of HK$0.44. With a current profit margin of 10%, this movement will result in a margin of 12% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Towngas China, I've compiled three important 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 Towngas China 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 Towngas China is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Towngas China? 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.