Hengan International Group Company Limited (HKG:1044): What Does The Future Look Like?
In December 2017, Hengan International Group Company Limited (SEHK:1044) announced its latest earnings update, which revealed that the company experienced a strong tailwind, eventuating to a double-digit earnings growth of 14.45%. Below, I’ve presented key growth figures on how market analysts view Hengan International 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. Check out our latest analysis for Hengan International Group
Analysts’ expectations for the upcoming year seems rather muted, with earnings rising by a single digit 4.89%. The growth outlook in the following year seems much more optimistic with rates generating double digit 14.98% compared to today’s earnings, and finally hitting CN¥4.65B by 2021.
Although it is informative knowing the rate of growth year by year relative to today’s value, it may be more insightful to determine the rate at which the earnings are rising or falling on average every year. The benefit of this technique is that we can get a better picture of the direction of Hengan International Group’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 6.93%. This means, we can assume Hengan International Group will grow its earnings by 6.93% every year for the next few years.
Next Steps:
For Hengan International Group, I’ve put together three fundamental aspects 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 1044 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 1044 is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1044? 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 pass 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.
