Xinyi Solar Holdings Limited’s (HKG:968) latest earnings update in December 2018 suggested that the business faced a major headwind with earnings deteriorating by -20%. Below, I’ve presented key growth figures on how market analysts perceive Xinyi Solar Holdings’s earnings growth trajectory over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts’ outlook for this coming year seems buoyant, with earnings expanding by a robust 28%. This growth seems to continue into the following year with rates arriving at double digit 51% compared to today’s earnings, and finally hitting HK$3.1b by 2022.
Although it is informative understanding the growth each year relative to today’s value, it may be more insightful to evaluate the rate at which the earnings are growing on average every year. The pro of this technique is that we can get a better picture of the direction of Xinyi Solar Holdings’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’ve inserted 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 17%. This means, we can expect Xinyi Solar Holdings will grow its earnings by 17% every year for the next couple of years.
For Xinyi Solar Holdings, I’ve put together 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 968 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 968 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 968? 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.