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What Should You Know About China Mengniu Dairy Company Limited's (HKG:2319) Growth?

Simply Wall St

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The latest earnings update China Mengniu Dairy Company Limited (HKG:2319) released in April 2019 revealed that the business gained from a strong tailwind, leading to a double-digit earnings growth of 49%. Below, I've laid out key numbers on how market analysts predict China Mengniu Dairy's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

Check out our latest analysis for China Mengniu Dairy

Market analysts' consensus outlook for next year seems buoyant, with earnings expanding by a robust 28%. This growth seems to continue into the following year with rates reaching double digit 55% compared to today’s earnings, and finally hitting CN¥5.5b by 2022.

SEHK:2319 Past and Future Earnings, July 3rd 2019

Even though it’s useful to understand the growth rate year by year relative to today’s value, it may be more beneficial to gauge the rate at which the company is rising or falling every year, on average. The advantage of this technique is that we can get a better picture of the direction of China Mengniu Dairy's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I've inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 19%. This means that, we can assume China Mengniu Dairy will grow its earnings by 19% every year for the next couple of years.

Next Steps:

For China Mengniu Dairy, I've compiled three important factors you should look at:

  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 2319 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 2319 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 2319? 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.