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Country Garden Holdings Company Limited's (HKG:2007) latest earnings announcement in December 2018 signalled that the company benefited from a strong tailwind, eventuating to a double-digit earnings growth of 33%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive Country Garden Holdings'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.
See our latest analysis for Country Garden Holdings
Market analysts' consensus outlook for next year seems optimistic, with earnings growing by a robust 22%. This growth seems to continue into the following year with rates arriving at double digit 43% compared to today’s earnings, and finally hitting CN¥57b by 2022.
While it’s informative knowing the growth each year relative to today’s level, it may be more valuable analyzing the rate at which the earnings are rising or falling every year, on average. The pro of this approach is that we can get a better picture of the direction of Country Garden Holdings'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 inserted 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 16%. This means that, we can presume Country Garden Holdings will grow its earnings by 16% every year for the next couple of years.
Next Steps:
For Country Garden Holdings, there are three relevant 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 2007 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 2007 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 2007? 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.