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After Air China Limited's (HKG:753) earnings announcement in March 2019, it seems that analyst forecasts are substantially optimistic, as a 54% rise in profits is expected in the upcoming year, relative to the previous 5-year average growth rate of 13%. Presently, with latest-twelve-month earnings at CN¥7.3b, we should see this growing to CN¥11b by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Air China in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
View our latest analysis for Air China
How will Air China perform in the near future?
The view from 19 analysts over the next three years is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for 753, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
By 2022, 753's earnings should reach CN¥15b, from current levels of CN¥7.3b, resulting in an annual growth rate of 15%. EPS reaches CN¥1.13 in the final year of forecast compared to the current CN¥0.53 EPS today. Margins are currently sitting at 5.4%, which is expected to expand to 8.7% by 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Air China, there are three fundamental factors 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 Air China 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 Air China 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 Air China? 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.