Looking at Lee and Man Paper Manufacturing Limited's (HKG:2314) recent earnings update on 30 June 2019, analyst consensus outlook seem bearish, with earnings expected to decline by 8.4% in the upcoming year against the past 5-year average growth rate of 22%. Currently with a trailing-twelve-month profit of HK$4.9b, the consensus growth rate suggests that earnings will drop to HK$4.5b by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Lee and Man Paper Manufacturing in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How will Lee and Man Paper Manufacturing perform in the near future?
The view from 16 analysts over the next three years is one of 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.
By 2022, 2314's earnings should reach HK$5.1b, from current levels of HK$4.9b, resulting in an annual growth rate of 5.2%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of HK$0.84 in the final year of forecast compared to the current HK$1.1 EPS today. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 15% to 13% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Lee and Man Paper Manufacturing, I've compiled three essential 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 Lee and Man Paper Manufacturing 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 Lee and Man Paper Manufacturing is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Lee and Man Paper Manufacturing? 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 firstname.lastname@example.org. 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.