What Do Investors Need To Know About HK Electric Investments and HK Electric Investments Limited’s (HKG:2638) Long Term Outlook? – Simply Wall St

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The latest earnings update HK Electric Investments and HK Electric Investments Limited (HKG:2638) released in December 2018 revealed that the company faced a slight headwind with earnings falling from HK$3.3b to HK$3.1b, a change of -8.7%. Below, I’ve laid out key growth figures on how market analysts perceive HK Electric Investments and HK Electric Investments’s earnings growth trajectory over the next couple of years and whether the future looks brighter. 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.

Check out our latest analysis for HK Electric Investments and HK Electric Investments

Market analysts’ consensus outlook for the upcoming year seems pessimistic, with earnings decreasing by a double-digit -17%. In the next couple of years, earnings are expected to continue to be below today’s level, with a decline of -13% in 2021, eventually reaching HK$2.7b in 2022.

SEHK:2638 Past and Future Earnings, April 16th 2019

Even though it’s useful to understand the growth rate year by year relative to today’s value, it may be more valuable analyzing the rate at which the company is moving on average every year. The advantage of this method is that we can get a bigger picture of the direction of HK Electric Investments and HK Electric Investments’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is -4.8%. This means that, we can anticipate HK Electric Investments and HK Electric Investments will chip away at a rate of -4.8% every year for the next couple of years.

Next Steps:

For HK Electric Investments and HK Electric Investments, I’ve put together three essential aspects you should further examine:

  1. 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.
  2. Valuation: What is 2638 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 2638 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 2638? 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.

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