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The most recent earnings update Consun Pharmaceutical Group Limited's (HKG:1681) released in December 2018 showed that the business benefited from a strong tailwind, eventuating to a double-digit earnings growth of 17%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Consun Pharmaceutical Group's earnings growth outlook 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.
See our latest analysis for Consun Pharmaceutical Group
Market analysts' consensus outlook for this coming year seems optimistic, with earnings expanding by a robust 13%. This growth seems to continue into the following year with rates reaching double digit 29% compared to today’s earnings, and finally hitting CN¥685m by 2022.
Although it’s helpful to be aware of the rate of growth each year relative to today’s level, it may be more valuable to evaluate the rate at which the earnings are growing on average every year. The pro of this technique is that we can get a better picture of the direction of Consun Pharmaceutical Group's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I've appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 13%. This means, we can expect Consun Pharmaceutical Group will grow its earnings by 13% every year for the next couple of years.
Next Steps:
For Consun Pharmaceutical Group, there are three important 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 1681 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 1681 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 1681? 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.