As China Communications Construction Company Limited (HKG:1800) announced its earnings release on 31 December 2018, analysts seem fairly confident, with earnings expected to grow by 22% in the upcoming year compared with the past 5-year average growth rate of 7.7%. By 2020, we can expect China Communications Construction’s bottom line to reach CN¥23b, a jump from the current trailing-twelve-month of CN¥19b. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
What can we expect from China Communications Construction in the longer term?
Over the next three years, it seems the consensus view of the 12 analysts covering 1800 is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around 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 13% based on the most recent earnings level of CN¥19b to the final forecast of CN¥28b by 2022. This leads to an EPS of CN¥1.67 in the final year of projections relative to the current EPS of CN¥1.15. In 2022, 1800’s profit margin will have expanded from 3.8% to 4.4%.
Future outlook is only one aspect when you’re building an investment case for a stock. For China Communications Construction, there are three essential 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 Communications Construction 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 Communications Construction is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of China Communications Construction? 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 email@example.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.