As Semiconductor Manufacturing International Corporation (HKG:981) announced its earnings release on 31 December 2018, analyst consensus outlook appear cautiously subdued, with earnings expected to grow by -84% in the upcoming year compared with the higher past 5-year average growth rate of 3.1%. With trailing-twelve-month net income at current levels of US$128m, we should see this rise to US$20m in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
What can we expect from Semiconductor Manufacturing International in the longer term?
The longer term view from the 22 analysts covering 981 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. To get an idea of the overall earnings growth trend for 981, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 4.7% based on the most recent earnings level of US$128m to the final forecast of US$227m by 2022. EPS reaches $0.045 in the final year of forecast compared to the current $0.026 EPS today. In 2022, 981’s profit margin will have expanded from 3.8% to 5.8%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Semiconductor Manufacturing International, there are three relevant factors 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.
- Future Earnings: How does Semiconductor Manufacturing International’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Semiconductor Manufacturing International? 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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