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In December 2018, FIT Hon Teng Limited (HKG:6088) released its earnings update. Generally, it seems that analyst forecasts are fairly optimistic, with profits predicted to increase by 14% next year against the past 5-year average growth rate of 6.3%. With trailing-twelve-month net income at current levels of US$234m, we should see this rise to US$267m in 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for FIT Hon Teng in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Exciting times ahead?
Longer term expectations from the 5 analysts covering 6088’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for 6088, 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 15% based on the most recent earnings level of US$234m to the final forecast of US$363m by 2022. EPS reaches $0.052 in the final year of forecast compared to the current $0.035 EPS today. In 2022, 6088’s profit margin will have expanded from 5.8% to 7.4%.
Future outlook is only one aspect when you’re building an investment case for a stock. For FIT Hon Teng, there are three fundamental aspects 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 FIT Hon Teng 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 FIT Hon Teng is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of FIT Hon Teng? 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.