Based on Kunlun Energy Company Limited's (HKG:135) earnings update in December 2018, analysts seem cautiously optimistic, with profits predicted to increase by 42% next year compared with the past 5-year average growth rate of -5.1%. Currently with trailing-twelve-month earnings of CN¥4.6b, we can expect this to reach CN¥6.6b by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Kunlun Energy in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
How is Kunlun Energy going to perform in the near future?
The longer term view from the 17 analysts covering 135 is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of 135's earnings growth over these next few years.
By 2022, 135's earnings should reach CN¥7.6b, from current levels of CN¥4.6b, resulting in an annual growth rate of 14%. This leads to an EPS of CN¥0.92 in the final year of projections relative to the current EPS of CN¥0.57. Margins are currently sitting at 4.4%, which is expected to expand to 5.1% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Kunlun Energy, there are three relevant 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 Kunlun Energy 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 Kunlun Energy is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Kunlun Energy? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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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.