In This Article:
China Mengniu Dairy Company Limited’s (SEHK:2319) announced its latest earnings update in December 2017, which suggested that the business turned profitable again after experiencing negative earnings in the previous financial year. Below is a brief commentary on my key takeaways on how market analysts view China Mengniu Dairy’s earnings growth outlook over the next few years and whether the future looks brighter. 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. View our latest analysis for China Mengniu Dairy
Analysts’ outlook for the upcoming year seems optimistic, with earnings climbing by a significant 72.69%. This strong growth in earnings is expected to continue, bringing the bottom line up to CN¥5.41B by 2021.
Even though it’s informative knowing the growth rate each year relative to today’s level, it may be more insightful determining the rate at which the company is growing on average every year. The benefit of this method is that we can get a better picture of the direction of China Mengniu Dairy’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 the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 28.13%. This means, we can presume China Mengniu Dairy will grow its earnings by 28.13% every year for the next couple of years.
Next Steps:
For China Mengniu Dairy, there are three key 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 2319 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 2319 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 2319? 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.