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Looking at Xinyi Solar Holdings Limited’s (HKG:968) earnings update in June 2018, the consensus outlook from analysts appear pessimistic, with earnings expected to decline by -5.2% in the upcoming year against the past 5-year average growth rate of 41%. Currently with a railing-twelve-month profit of HK$2.3b, the consensus growth rate suggests that earnings will drop to HK$2.2b by 2019. Below is a brief commentary on the longer term outlook the market has for Xinyi Solar Holdings. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
View our latest analysis for Xinyi Solar Holdings
How is Xinyi Solar Holdings going to perform in the near future?
The longer term expectations from the 17 analysts of 968 is tilted towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. 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 968’s earnings growth over these next few years.
From the current net income level of HK$2.3b and the final forecast of HK$2.6b by 2021, the annual rate of growth for 968’s earnings is 11%. This leads to an EPS of HK$0.36 in the final year of projections relative to the current EPS of HK$0.33. The bottom-line growth seems to be caused by reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. However, the near term margin expansion is expected to shrink heading into 2021, from the current levels of 24% to 22%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Xinyi Solar Holdings, I’ve put together three key 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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Valuation: What is Xinyi Solar Holdings 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 Xinyi Solar Holdings 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 Xinyi Solar Holdings? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.