In December 2017, Anthem Inc (NYSE:ANTM) announced its latest earnings update. Overall, it seems that analyst forecasts are fairly pessimistic, as a -1.00% fall in profits is expected in the upcoming year compared with the past 5-year average growth rate of 0.0069%. Presently, with earnings at $3,842.8M, we should see this fall to $3,804.3M by 2019. Below is a brief commentary on the longer term outlook the market has for Anthem. Readers that are interested in understanding the company beyond these figures should research its fundamentals here. See our latest analysis for Anthem
What can we expect from Anthem in the longer term?
The 14 analysts covering ANTM view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of ANTM’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
By 2021, ANTM’s earnings should reach $4,813.1M, from current levels of $3,842.8M, resulting in an annual growth rate of 7.89%. This leads to an EPS of $19.9 in the final year of projections relative to the current EPS of $14.35. The bottom-line growth seems to be caused by cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. In 2021, ANTM’s profit margin will have expanded from 4.27% to 4.72%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Anthem, I’ve put together three essential factors you should look at:
- 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 Anthem 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 Anthem is currently mispriced by the market.
- 3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Anthem? 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 pass 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.