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Sihuan Pharmaceutical Holdings Group Ltd.'s (HKG:460) most recent earnings announcement in December 2018 indicated that the company benefited from a strong tailwind, eventuating to a double-digit earnings growth of 12%. Today I want to provide a brief commentary on how market analysts perceive Sihuan Pharmaceutical Holdings Group's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. 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 Sihuan Pharmaceutical Holdings Group
Market analysts' consensus outlook for this coming year seems pessimistic, with earnings falling by -3.6%. But in the following year, there is a complete contrast in performance, with arriving at double digit 7.2% compared to today’s level and continues to increase to CN¥2.0b in 2022.
Even though it’s useful to understand the growth year by year relative to today’s value, it may be more insightful determining the rate at which the company is growing every year, on average. The pro of this approach is that we can get a bigger picture of the direction of Sihuan Pharmaceutical Holdings 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 7.6%. This means that, we can assume Sihuan Pharmaceutical Holdings Group will grow its earnings by 7.6% every year for the next couple of years.
Next Steps:
For Sihuan Pharmaceutical Holdings Group, I've compiled three important factors 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 460 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 460 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 460? 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.