The most recent earnings update Sunac China Holdings Limited's (HKG:1918) released in December 2018 suggested that the company benefited from a large tailwind, eventuating to a high double-digit earnings growth of 51%. Below, I've presented key growth figures on how market analysts view Sunac China Holdings's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts' prospects for next year seems positive, with earnings increasing by a robust 43%. This growth seems to continue into the following year with rates reaching double digit 79% compared to today’s earnings, and finally hitting CN¥40b by 2022.
Even though it’s informative understanding the rate of growth each year relative to today’s figure, it may be more valuable estimating the rate at which the company is growing on average every year. The benefit of this approach is that we can get a better picture of the direction of Sunac China Holdings'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 analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 28%. This means that, we can assume Sunac China Holdings will grow its earnings by 28% every year for the next couple of years.
For Sunac China Holdings, there are three important 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 1918 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 1918 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1918? 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.