BYD Company Limited (HKG:1211): What Does The Future Look Like?
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Looking at BYD Company Limited’s (HKG:1211) earnings update in September 2018, the consensus outlook from analysts appear fairly confident, with profits predicted to increase by 40% next year against the past 5-year average growth rate of 35%. Presently, with latest-twelve-month earnings at CN¥4.1b, we should see this growing to CN¥5.7b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for BYD in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
See our latest analysis for BYD
What can we expect from BYD in the longer term?
Longer term expectations from the 21 analysts covering 1211’s stock is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. 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.
From the current net income level of CN¥4.1b and the final forecast of CN¥4.9b by 2022, the annual rate of growth for 1211’s earnings is 16%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of CN¥1.19 in the final year of forecast compared to the current CN¥1.4 EPS today. However, the near term margins may change heading into 2022, from the current levels of 3.8% to 3.2%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For BYD, I’ve compiled three key factors you should look at:
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.
Valuation: What is BYD 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 BYD is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BYD? 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.