Yahoo Finance SJM Holdings Limited (HKG:880): Set To Experience A Decrease In Earnings?
Based on SJM Holdings Limited’s (HKG:880) earnings update in June 2018, analyst forecasts appear to be bearish, with earnings expected to decline by -8.4% in the upcoming year. Though this is still an improvement on its past 5-year earnings growth rate of -33%, on average. With trailing-twelve-month net income at current levels of HK$2.0b, the consensus growth rate suggests that earnings will decline to HK$1.8b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for SJM Holdings in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
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What can we expect from SJM Holdings in the longer term?
Longer term expectations from the 15 analysts covering 880’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for 880, 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.
This results in an annual growth rate of 5.6% based on the most recent earnings level of HK$2.0b to the final forecast of HK$2.0b by 2022. This leads to an EPS of HK$0.48 in the final year of projections relative to the current EPS of HK$0.35. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 4.7% to 4.2% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For SJM Holdings, there are three essential 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 SJM Holdings 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 SJM Holdings is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SJM Holdings? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
