Based on Ramsay Health Care Limited's (ASX:RHC) earnings update on 30 June 2019, the consensus outlook from analysts appear fairly confident, as a 19% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of 7.0%. Presently, with latest-twelve-month earnings at AU$545m, we should see this growing to AU$649m by 2020. Below is a brief commentary around Ramsay Health Care's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
What can we expect from Ramsay Health Care in the longer term?
The longer term expectations from the 9 analysts of RHC is tilted towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of RHC'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.
This results in an annual growth rate of 9.0% based on the most recent earnings level of AU$545m to the final forecast of AU$747m by 2022. This leads to an EPS of A$3.68 in the final year of projections relative to the current EPS of A$2.65. In 2022, RHC's profit margin will have expanded from 4.7% to 5.4%.
Future outlook is only one aspect when you're building an investment case for a stock. For Ramsay Health Care, I've put together three fundamental factors you should further research:
- 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 Ramsay Health Care 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 Ramsay Health Care is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Ramsay Health Care? 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.