The latest earnings announcement CK Hutchison Holdings Limited (HKG:1) released in December 2018 indicated that the company experienced a strong tailwind, leading to a double-digit earnings growth of 11%. Below, I’ve laid out key numbers on how market analysts perceive CK Hutchison Holdings’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
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Analysts’ outlook for the coming year seems rather subdued, with earnings expanding by a single digit 8.9%. The growth outlook in the following year seems much more optimistic with rates arriving at double digit 16% compared to today’s earnings and falls to HK$43b by 2022.
Although it is helpful to be aware of the growth each year relative to today’s figure, it may be more valuable determining the rate at which the company is rising or falling on average every year. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of CK Hutchison Holdings’s earnings trajectory over time, be more volatile. To compute this rate, I put 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 4.7%. This means, we can presume CK Hutchison Holdings will grow its earnings by 4.7% every year for the next few years.
Next Steps:
For CK Hutchison Holdings, I’ve put together three essential aspects you should further research:
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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.
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Valuation: What is 1 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 1 is currently mispriced by the market.
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Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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