In December 2018, PetroChina Company Limited (HKG:857) released its latest earnings announcement, which suggested that the company experienced a significant tailwind, more than doubling its earnings from the prior year. Below, I’ve laid out key growth figures on how market analysts perceive PetroChina’s earnings growth trajectory over the next few 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 climbing by a robust 24%. This growth seems to continue into the following year with rates arriving at double digit 38% compared to today’s earnings, and finally hitting CN¥78b by 2022.
While it’s helpful to be aware of the growth rate year by year relative to today’s level, it may be more beneficial gauging the rate at which the earnings are rising or falling every year, on average. The benefit of this method is that we can get a better picture of the direction of PetroChina’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put 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 13%. This means that, we can anticipate PetroChina will grow its earnings by 13% every year for the next couple of years.
For PetroChina, there are three essential 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.
- Valuation: What is 857 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 857 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 857? 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.