In December 2018, CLP Holdings Limited (HKG:2) released its latest earnings announcement, which revealed that the business faced a slight headwind with earnings declining from HK$14b to HK$14b, a change of -4.9%. Below, I’ve presented key growth figures on how market analysts predict CLP Holdings’s earnings growth trajectory over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts’ prospects for this coming year seems pessimistic, with earnings declining by -6.0%. In the next couple of years, earnings are expected to continue to be below today’s level, with a reduction of -2.6% in 2021, eventually reaching HK$13b in 2022.
While it’s informative understanding the growth rate year by year relative to today’s figure, it may be more insightful determining the rate at which the earnings are rising or falling every year, on average. The advantage of this method is that we can get a better picture of the direction of CLP Holdings’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 -0.7%. This means that, we can expect CLP Holdings will chip away at a rate of -0.7% every year for the next few years.
For CLP Holdings, I’ve compiled three pertinent 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 2 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 2 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 2? 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 firstname.lastname@example.org. 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.