After China Traditional Chinese Medicine Holdings Co. Limited’s (HKG:570) earnings announcement in December 2018, the consensus outlook from analysts appear fairly confident, as a 20% increase in profits is expected in the upcoming year, though this is noticeably lower than the previous 5-year average earnings growth of 33%. Currently with trailing-twelve-month earnings of CN¥1.4b, we can expect this to reach CN¥1.7b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for China Traditional Chinese Medicine Holdings in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Exciting times ahead?
The 17 analysts covering 570 view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for 570, 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 16% based on the most recent earnings level of CN¥1.4b to the final forecast of CN¥2.5b by 2022. This leads to an EPS of CN¥0.51 in the final year of projections relative to the current EPS of CN¥0.30. Analysts are predicting earnings growth to outpace revenue by the end of 2022, resulting in a margin expansion from 13% to 13%.
Future outlook is only one aspect when you’re building an investment case for a stock. For China Traditional Chinese Medicine Holdings, I’ve compiled 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.
- Valuation: What is China Traditional Chinese Medicine Holdings 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 Traditional Chinese Medicine Holdings is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of China Traditional Chinese Medicine Holdings? 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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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.