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Power Assets Holdings Limited (HKG:6): Set To Experience A Decrease In Earnings?

Simply Wall St

In December 2018, Power Assets Holdings Limited (HKG:6) released its earnings update. Generally, analyst consensus outlook seem pessimistic, as a 0.3% fall in profits is expected in the upcoming year. However, compared to its 5-year track record of the average earnings growth rate of -45%, this is still an improvement. Presently, with latest-twelve-month earnings at HK$7.6b, we should see this fall to HK$7.6b by 2020. Below is a brief commentary around Power Assets 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 Power Assets Holdings

How will Power Assets Holdings perform in the near future?

The view from 10 analysts over the next three years is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. 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 6's earnings growth over these next few years.

SEHK:6 Past and Future Earnings, July 30th 2019

By 2022, 6's earnings should reach HK$8.0b, from current levels of HK$7.6b, resulting in an annual growth rate of 1.4%. EPS reaches HK$3.72 in the final year of forecast compared to the current HK$3.58 EPS today. In 2022, 6's profit margin will have expanded from 491% to 514%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Power Assets Holdings, I've put together three relevant 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 Power Assets 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 Power Assets Holdings is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Power Assets 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.