Based on CNOOC Limited's (HKG:883) earnings update in December 2018, analysts seem cautiously optimistic, as a 3.2% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of -17%. Presently, with latest-twelve-month earnings at CN¥53b, we should see this growing to CN¥54b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
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Exciting times ahead?
The view from 21 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of CN¥53b and the final forecast of CN¥62b by 2022, the annual rate of growth for 883’s earnings is 5.2%. EPS reaches CN¥1.4 in the final year of forecast compared to the current CN¥1.18 EPS today. Margins are currently sitting at 23%, approximately the same as previous years. With analysts forecasting revenue growth of 0.15822 and 883's net income growth expected to roughly track that, this company may add value for shareholders over time.
Future outlook is only one aspect when you're building an investment case for a stock. For CNOOC, there are three pertinent 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 CNOOC 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 CNOOC is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of CNOOC? 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 firstname.lastname@example.org. 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.