Jiangxi Copper Company Limited (HKG:358): Will The Growth Last?
The latest earnings announcement Jiangxi Copper Company Limited (HKG:358) released in December 2018 revealed that the company experienced a strong tailwind, leading to a high double-digit earnings growth of 52%. Below is a brief commentary on my key takeaways on how market analysts predict Jiangxi Copper's earnings growth outlook over the next couple of 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.
View our latest analysis for Jiangxi Copper
Market analysts' prospects for next year seems rather muted, with earnings rising by a single digit 6.1%. The growth outlook in the following year seems much more optimistic with rates generating double digit 26% compared to today’s earnings, and finally hitting CN¥3.3b by 2022.
Although it’s informative knowing the rate of growth year by year relative to today’s level, it may be more insightful to analyze the rate at which the company is rising or falling on average every year. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of Jiangxi Copper's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put 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 11%. This means that, we can anticipate Jiangxi Copper will grow its earnings by 11% every year for the next few years.
Next Steps:
For Jiangxi Copper, I've put together three key aspects you should further research:
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.
Valuation: What is 358 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 358 is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 358? 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.
