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Dongfeng Motor Group Company Limited's (HKG:489) latest earnings update in December 2018 revealed that the company faced a minor headwind with earnings falling from CN¥14b to CN¥13b, a change of -7.7%. Below is my commentary, albeit very simple and high-level, on how market analysts view Dongfeng Motor Group's earnings growth trajectory over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
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See our latest analysis for Dongfeng Motor Group
Market analysts' consensus outlook for this coming year seems rather subdued, with earnings increasing by a single digit 1.9%. The following year doesn't look much more exciting, though earnings does reach CN¥14b in 2022.
Although it is useful to be aware of the rate of growth year by year relative to today’s value, it may be more valuable gauging the rate at which the earnings are rising or falling every year, on average. The advantage of this technique is that it ignores near term flucuations and accounts for the overarching direction of Dongfeng Motor Group's earnings trajectory over time, 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 2.5%. This means that, we can anticipate Dongfeng Motor Group will grow its earnings by 2.5% every year for the next few years.
Next Steps:
For Dongfeng Motor Group, there are three important aspects 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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Future Earnings: How does 489's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
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Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 489? 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.