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Since China BlueChemical Ltd. (HKG:3983) released its earnings in December 2018, analyst consensus outlook appear pessimistic, with profits predicted to drop by 7.4% next year. Though compared to its 5-year track record of the average earnings growth rate of -18%, this is still an improvement. With trailing-twelve-month net income at current levels of CN¥1.4b, the consensus growth rate suggests that earnings will decline to CN¥1.3b by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for China BlueChemical in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Check out our latest analysis for China BlueChemical
Exciting times ahead?
The longer term view from the 4 analysts covering 3983 is one of negative sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of 3983's earnings growth over these next few years.
This results in an annual growth rate of -5.0% based on the most recent earnings level of CN¥1.4b to the final forecast of CN¥1.1b by 2022. This leads to an EPS of CN¥0.26 in the final year of projections relative to the current EPS of CN¥0.30. Earnings decline appears to be a result of top-line expansion of 1.1%, which is predicted to lag cost growth leading up to 2022. Furthermore, the current 12% margin is expected to contract to 9.8% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For China BlueChemical, I've put together three pertinent factors 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 China BlueChemical 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 China BlueChemical 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 China BlueChemical? 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.