Since China Telecom Corporation Limited (HKG:728) released its earnings in September 2018, the consensus outlook from analysts appear fairly confident, with earnings expected to grow by 13% in the upcoming year against the past 5-year average growth rate of 1.7%. Currently with trailing-twelve-month earnings of CN¥19b, we can expect this to reach CN¥21b by 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect China Telecom to keep growing?
The 23 analysts covering 728 view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for 728, 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.
By 2021, 728’s earnings should reach CN¥30b, from current levels of CN¥19b, resulting in an annual growth rate of 13%. EPS reaches CN¥0.38 in the final year of forecast compared to the current CN¥0.23 EPS today. Margins are currently sitting at 5.1%, which is expected to expand to 7.1% by 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For China Telecom, I’ve compiled three fundamental 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 China Telecom 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 Telecom is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of China Telecom? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.