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Uni-President China Holdings Ltd's (HKG:220) announced its latest earnings update in December 2018, which showed that the business experienced a robust tailwind, leading to a double-digit earnings growth of 17%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Uni-President China Holdings's earnings growth outlook over the next few 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' expectations for the upcoming year seems buoyant, with earnings expanding by a robust 18%. This growth seems to continue into the following year with rates reaching double digit 32% compared to today’s earnings, and finally hitting CN¥1.5b by 2022.
Although it is helpful to be aware of the rate of growth year by year relative to today’s value, it may be more insightful to estimate the rate at which the earnings are moving every year, on average. The benefit of this method is that we can get a better picture of the direction of Uni-President China 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've inserted 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 12%. This means that, we can presume Uni-President China Holdings will grow its earnings by 12% every year for the next few years.
Next Steps:
For Uni-President China 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 220 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 220 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 220? 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.