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The latest earnings release Fosun International Limited's (HKG:656) announced in December 2018 showed that the company benefited from a slight tailwind, leading to a single-digit earnings growth of 1.9%. Today I want to provide a brief commentary on how market analysts perceive Fosun International'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.
View our latest analysis for Fosun International
Market analysts' consensus outlook for the upcoming year seems optimistic, with earnings growing by a robust 17%. This growth seems to continue into the following year with rates arriving at double digit 23% compared to today’s earnings, and finally hitting CN¥17b by 2022.
While it is informative knowing the growth year by year relative to today’s level, it may be more beneficial to evaluate the rate at which the earnings are rising or falling on average every year. The pro of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Fosun International's earnings trajectory over time, which may be more relevant for long term investors. To calculate 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 8.3%. This means that, we can presume Fosun International will grow its earnings by 8.3% every year for the next couple of years.
Next Steps:
For Fosun International, I've compiled three key aspects you should further examine:
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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 656 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 656 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 656? 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.