How Do Analysts See China Telecom Corporation Limited (HKG:728) Performing Over The Next Few Years?

China Telecom Corporation Limited’s (HKG:728) latest earnings announcement in December 2018 confirmed that the company experienced a robust tailwind, leading to a double-digit earnings growth of 14%. Below, I’ve presented key growth figures on how market analysts view China Telecom’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

View our latest analysis for China Telecom

Analysts’ expectations for this coming year seems rather subdued, with earnings increasing by a single digit 7.6%. The growth outlook in the following year seems much more optimistic with rates reaching double digit 14% compared to today’s earnings, and finally hitting CN¥26b by 2022.

SEHK:728 Past and Future Earnings, April 1st 2019
SEHK:728 Past and Future Earnings, April 1st 2019

Even though it’s informative understanding the growth rate year by year relative to today’s value, it may be more valuable estimating the rate at which the company is moving on average every year. The advantage of this approach is that we can get a better picture of the direction of China Telecom’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 6.6%. This means, we can expect China Telecom will grow its earnings by 6.6% every year for the next few years.

Next Steps:

For China Telecom, there are three pertinent aspects you should further examine:

  1. 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.
  2. Valuation: What is 728 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 728 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 728? 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 editorial-team@simplywallst.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.