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The most recent earnings update China Communications Services Corporation Limited's (HKG:552) released in December 2018 showed that the company benefited from a small tailwind, leading to a single-digit earnings growth of 6.9%. Below, I've laid out key numbers on how market analysts view China Communications Services's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
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Analysts' outlook for next year seems buoyant, with earnings increasing by a robust 13%. This growth seems to continue into the following year with rates reaching double digit 31% compared to today’s earnings, and finally hitting CN¥4.3b by 2022.
While it is useful to be aware of the rate of growth year by year relative to today’s value, it may be more beneficial evaluating the rate at which the earnings are moving every year, on average. The benefit of this approach is that we can get a better picture of the direction of China Communications Services's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I've appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 13%. This means that, we can expect China Communications Services will grow its earnings by 13% every year for the next couple of years.
Next Steps:
For China Communications Services, there are three fundamental 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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Future Earnings: How does 552'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 552? 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.