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China Resources Gas Group Limited's (HKG:1193) released its most recent earnings update in December 2018, which confirmed that the business experienced a robust tailwind, eventuating to a double-digit earnings growth of 22%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive China Resources Gas 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.
View our latest analysis for China Resources Gas Group
Analysts' expectations for next year seems positive, with earnings expanding by a robust 14%. This growth seems to continue into the following year with rates reaching double digit 28% compared to today’s earnings, and finally hitting HK$6.2b by 2022.
Even though it’s informative understanding the growth year by year relative to today’s figure, it may be more valuable to evaluate the rate at which the company is moving every year, on average. The advantage of this technique is that it ignores near term flucuations and accounts for the overarching direction of China Resources Gas Group's earnings trajectory over time, which may be more relevant for long term investors. To compute 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 9.5%. This means, we can expect China Resources Gas Group will grow its earnings by 9.5% every year for the next few years.
Next Steps:
For China Resources Gas Group, there are three essential factors you should look at:
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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 1193 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 1193 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 1193? 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.