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Since China Communications Services Corporation Limited (HKG:552) released its earnings in December 2018, it seems that analyst forecasts are fairly optimistic, as a 12% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of 6.4%. By 2020, we can expect China Communications Services’s bottom line to reach CN¥3.2b, a jump from the current trailing-twelve-month of CN¥2.9b. Below is a brief commentary on the longer term outlook the market has for China Communications Services. For those interested in more of an analysis of the company, you can research its fundamentals here.
How will China Communications Services perform in the near future?
Over the next three years, it seems the consensus view of the 9 analysts covering 552 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 13% based on the most recent earnings level of CN¥2.9b to the final forecast of CN¥4.3b by 2022. This leads to an EPS of CN¥0.60 in the final year of projections relative to the current EPS of CN¥0.42. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 2.7% to 2.7% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For China Communications Services, I’ve compiled three key factors you should look at:
- 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 China Communications Services’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 China Communications Services? 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.