As Hong Kong Exchanges and Clearing Limited ( HKG:388 ) announced its earnings release on 31 December 2018, the consensus outlook from analysts appear fairly confident, as a 14% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of 12%. Presently, with latest-twelve-month earnings at HK$9.3b, we should see this growing to HK$11b by 2020. Below is a brief commentary on the longer term outlook the market has for Hong Kong Exchanges and Clearing. Investors wanting to learn more about other aspects of the company should research its fundamentals here .
How is Hong Kong Exchanges and Clearing going to perform in the near future?
Longer term expectations from the 14 analysts covering 388’s stock 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 get an idea of the overall earnings growth trend for 388, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
By 2022, 388’s earnings should reach HK$14b, from current levels of HK$9.3b, resulting in an annual growth rate of 13%. This leads to an EPS of HK$10.55 in the final year of projections relative to the current EPS of HK$7.5. Margins are currently sitting at 59%, which is expected to expand to 65% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Hong Kong Exchanges and Clearing, I’ve put together three key aspects you should look at:
- 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 Hong Kong Exchanges and Clearing 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 Hong Kong Exchanges and Clearing is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Hong Kong Exchanges and Clearing? 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 email@example.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.