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What Should Investors Know About The Future Of HSBC Holdings plc's (LON:HSBA)?

Simply Wall St

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As HSBC Holdings plc (LON:HSBA) announced its earnings release on 31 March 2019, the consensus outlook from analysts appear fairly confident, with profits predicted to increase by 8.2% next year compared with the past 5-year average growth rate of -12%. Currently with trailing-twelve-month earnings of US$13b, we can expect this to reach US$14b by 2020. Below is a brief commentary around HSBC Holdings's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

Check out our latest analysis for HSBC Holdings

Exciting times ahead?

Over the next three years, it seems the consensus view of the 18 analysts covering HSBA is skewed 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 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.

LSE:HSBA Past and Future Earnings, May 12th 2019

This results in an annual growth rate of 4.6% based on the most recent earnings level of US$13b to the final forecast of US$15b by 2022. EPS reaches $0.77 in the final year of forecast compared to the current $0.63 EPS today. Margins are currently sitting at 24%, approximately the same as previous years. With analysts forecasting revenue growth of 0.17051 and HSBA's net income growth expected to roughly track that, this company may add value for shareholders over time.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For HSBC Holdings, there are three pertinent factors you should further examine:

  1. 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.
  2. Valuation: What is HSBC Holdings 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 HSBC Holdings is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of HSBC Holdings? 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 editorial-team@simplywallst.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.