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In December 2018, HK Electric Investments and HK Electric Investments Limited (HKG:2638) released its earnings update. Generally, analyst consensus outlook appear pessimistic, with earnings expected to decline by 17% in the upcoming year. Though this outlook is not unsubstantiated given the 5-year track record of negative growth. Currently with a trailing-twelve-month profit of HK$3.1b, the consensus growth rate suggests that earnings will drop to HK$2.5b by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for HK Electric Investments and HK Electric Investments in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
View our latest analysis for HK Electric Investments and HK Electric Investments
What can we expect from HK Electric Investments and HK Electric Investments in the longer term?
The longer term expectations from the 8 analysts of 2638 is tilted towards the negative sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for 2638, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
By 2022, 2638's earnings should reach HK$2.7b, from current levels of HK$3.1b, resulting in an annual growth rate of -4.9%. EPS reaches HK$0.29 in the final year of forecast compared to the current HK$0.35 EPS today. The bottom-line decline seems to be caused by revenue declining at an average annual rate of -0.4%. With earnings declining at a faster rate over time, margins is expected to contract from 26% to 23% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For HK Electric Investments and HK Electric Investments, I've put together three essential factors you should look at:
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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 HK Electric Investments and HK Electric Investments 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 HK Electric Investments and HK Electric Investments 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 HK Electric Investments and HK Electric Investments? 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.