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In December 2018, Shougang Fushan Resources Group Limited (HKG:639) released its earnings update. Generally, the consensus outlook from analysts appear somewhat bearish, with earnings expected to grow by 5.1% in the upcoming year compared with the higher past 5-year average growth rate of 33%. Currently with trailing-twelve-month earnings of HK$1.1b, we can expect this to reach HK$1.2b by 2020. Below is a brief commentary around Shougang Fushan Resources Group's earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
View our latest analysis for Shougang Fushan Resources Group
How is Shougang Fushan Resources Group going to perform in the near future?
The longer term expectations from the 6 analysts of 639 is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 0.3% based on the most recent earnings level of HK$1.1b to the final forecast of HK$1.1b by 2022. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of HK$0.20 in the final year of forecast compared to the current HK$0.21 EPS today. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 30% to 25% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Shougang Fushan Resources Group, I've put together three important 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 Shougang Fushan Resources Group 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 Shougang Fushan Resources Group 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 Shougang Fushan Resources Group? 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.