Looking at HMS Holdings Corp.'s (NASDAQ:HMSY) recent earnings update on 30 June 2019, the consensus outlook from analysts appear pessimistic, with profits predicted to drop by 12% next year relative to the past 5-year average growth rate of 28%. With trailing-twelve-month net income at current levels of US$55m, the consensus growth rate suggests that earnings will decline to US$49m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
How is HMS Holdings going to perform in the near future?
The longer term expectations from the 14 analysts of HMSY is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. 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.
By 2022, HMSY's earnings should reach US$73m, from current levels of US$55m, resulting in an annual growth rate of 11%. EPS reaches $1.48 in the final year of forecast compared to the current $0.66 EPS today. Margins are currently sitting at 9.2%, approximately the same as previous years. With analysts forecasting revenue growth of 0.3149 and HMSY'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 HMS Holdings, there are three relevant factors 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 HMS 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 HMS Holdings is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of HMS 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!
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.