After China Telecom Corporation Limited’s (HKG:728) earnings announcement in March 2019, it seems that analyst forecasts are fairly optimistic, as a 6.8% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of 2.2%. With trailing-twelve-month net income at current levels of CN¥21b, we should see this rise to CN¥23b in 2020. Below is a brief commentary around China Telecom’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.
How is China Telecom going to perform in the near future?
Over the next three years, it seems the consensus view of the 23 analysts covering 728 is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. 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.
This results in an annual growth rate of 6.8% based on the most recent earnings level of CN¥21b to the final forecast of CN¥26b by 2022. EPS reaches CN¥0.33 in the final year of forecast compared to the current CN¥0.26 EPS today. Margins are currently sitting at 5.6%, which is expected to expand to 6.1% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For China Telecom, I’ve put together three fundamental aspects you should further research:
- 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 China Telecom 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 China Telecom is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of China Telecom? 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.