What Should You Know About China Traditional Chinese Medicine Holdings Co. Limited's (HKG:570) Earnings Trend?
China Traditional Chinese Medicine Holdings Co. Limited's (HKG:570) most recent earnings announcement in December 2018 suggested that the business experienced a robust tailwind, leading to a double-digit earnings growth of 23%. Below, I've laid out key numbers on how market analysts view China Traditional Chinese Medicine Holdings's earnings growth trajectory 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.
See our latest analysis for China Traditional Chinese Medicine Holdings
Analysts' expectations for the upcoming year seems optimistic, with earnings climbing by a robust 20%. This growth seems to continue into the following year with rates reaching double digit 46% compared to today’s earnings, and finally hitting CN¥2.5b by 2022.
Even though it’s 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 company is growing on average every year. The advantage of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of China Traditional Chinese Medicine Holdings's earnings trajectory over time, 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 16%. This means, we can assume China Traditional Chinese Medicine Holdings will grow its earnings by 16% every year for the next few years.
Next Steps:
For China Traditional Chinese Medicine Holdings, there are three key aspects you should further examine:
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 570 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 570 is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 570? 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.
