The most recent earnings release China Telecom Corporation Limited’s (SEHK:728) announced in September 2017 indicated that the company faced a significant headwind with earnings falling by -10.22%. Below, I’ve presented key growth figures on how market analysts perceive China Telecom’s earnings growth outlook over the next few years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings. View our latest analysis for China Telecom
Market analysts’ prospects for this coming year seems optimistic, with earnings increasing by a robust 13.04%. This growth seems to continue into the following year with rates arriving at double digit 22.61% compared to today’s earnings and reduces to CN¥20,880.0M by 2020.
While it’s useful to be aware of the growth rate each year relative to today’s level, it may be more valuable to determine the rate at which the company is growing every year, on average. The pro of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of China Telecom’s earnings trajectory over time, be more volatile. To calculate this rate, I’ve inserted 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 5.39%. This means that, we can presume China Telecom will grow its earnings by 5.39% every year for the next couple of years.
Next Steps:
For China Telecom, I’ve compiled three relevant aspects you should look at:
1. 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.
2. Valuation: What is 728 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 728 is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of 728? 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 pass 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.