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The most recent earnings announcement China Resources Beer (Holdings) Company Limited’s (SEHK:291) released in December 2017 indicated that the business benefited from a sizeable tailwind, eventuating to a high double-digit earnings growth of 86.80%. Below is a brief commentary on my key takeaways on how market analysts perceive China Resources Beer (Holdings)’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. Check out our latest analysis for China Resources Beer (Holdings)
Analysts’ expectations for next year seems buoyant, with earnings growing by a significant 78.32%. This strong growth in earnings is expected to continue, bringing the bottom line up to CN¥3.26B by 2021.
Even though it’s helpful to understand the growth rate year by year relative to today’s figure, it may be more insightful evaluating the rate at which the earnings are rising or falling on average every year. The advantage of this method is that we can get a better picture of the direction of China Resources Beer (Holdings)’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 put 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 29.39%. This means that, we can assume China Resources Beer (Holdings) will grow its earnings by 29.39% every year for the next few years.
Next Steps:
For China Resources Beer (Holdings), I’ve put together 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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Valuation: What is 291 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 291 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 291? 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 pass 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.