Based on Cerner Corporation's (NASDAQ:CERN) earnings update in June 2019, it seems that analyst forecasts are fairly optimistic, as a 28% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of 9.9%. Currently with trailing-twelve-month earnings of US$630m, we can expect this to reach US$809m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Cerner in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
What can we expect from Cerner in the longer term?
The 19 analysts covering CERN 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 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.
From the current net income level of US$630m and the final forecast of US$1.1b by 2022, the annual rate of growth for CERN’s earnings is 15%. This leads to an EPS of $3.31 in the final year of projections relative to the current EPS of $1.91. In 2022, CERN's profit margin will have expanded from 12% to 16%.
Future outlook is only one aspect when you're building an investment case for a stock. For Cerner, I've compiled three key 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 Cerner 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 Cerner is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Cerner? 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.