On 30 June 2019, Vital Healthcare Property Trust (NZSE:VHP) announced its latest earnings update. Overall, analyst consensus outlook appear bearish, with profits predicted to drop by 14% next year compared with the past 5-year average growth rate of 15%. Currently with a trailing-twelve-month profit of NZ$93m, the consensus growth rate suggests that earnings will drop to NZ$81m 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.
What can we expect from Vital Healthcare Property Trust in the longer term?
Over the next three years, it seems the consensus view of the 4 analysts covering VHP is skewed towards the negative 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.
This results in an annual growth rate of -8.1% based on the most recent earnings level of NZ$93m to the final forecast of NZ$70m by 2022. This leads to an EPS of NZ$0.14 in the final year of projections relative to the current EPS of NZ$0.21. Earnings decline appears to be a result of cost outpacing top line growth of 2.0% over the next few years. Furthermore, the current 84% margin is expected to contract to 61% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Vital Healthcare Property Trust, I've compiled 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 Vital Healthcare Property Trust 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 Vital Healthcare Property Trust is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Vital Healthcare Property Trust? 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.