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In December 2018, Aflac Incorporated (NYSE:AFL) announced its earnings update. Overall, the consensus outlook from analysts appear somewhat bearish, with profits predicted to rise by 6.0% next year compared with the higher past 5-year average growth rate of 8.8%. By 2020, we can expect Aflac’s bottom line to reach US$3.1b, a jump from the current trailing-twelve-month of US$2.9b. 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 will Aflac perform in the near future?
Longer term expectations from the 11 analysts covering AFL’s stock is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of AFL's earnings growth over these next few years.
This results in an annual growth rate of 2.3% based on the most recent earnings level of US$2.9b to the final forecast of US$3.0b by 2022. This leads to an EPS of $4.33 in the final year of projections relative to the current EPS of $3.79. In 2022, AFL's profit margin will have expanded from 13% to 14%.
Future outlook is only one aspect when you're building an investment case for a stock. For Aflac, there are three fundamental 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 Aflac 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 Aflac is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Aflac? 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.