Chemed Corporation (NYSE:CHE) Just Released Its Annual Results And Analysts Are Updating Their Estimates
Investors in Chemed Corporation (NYSE:CHE) had a good week, as its shares rose 4.9% to close at US$626 following the release of its yearly results. Chemed reported in line with analyst predictions, delivering revenues of US$2.3b and statutory earnings per share of US$17.93, suggesting the business is executing well and in line with its plan. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for Chemed
Taking into account the latest results, the most recent consensus for Chemed from three analysts is for revenues of US$2.42b in 2024. If met, it would imply a credible 6.8% increase on its revenue over the past 12 months. Per-share earnings are expected to swell 17% to US$21.25. In the lead-up to this report, the analysts had been modelling revenues of US$2.40b and earnings per share (EPS) of US$20.81 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at US$654, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Chemed analyst has a price target of US$708 per share, while the most pessimistic values it at US$604. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Chemed's rate of growth is expected to accelerate meaningfully, with the forecast 6.8% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 4.1% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 6.8% per year. Chemed is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Chemed following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Chemed. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Chemed analysts - going out to 2026, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 1 warning sign for Chemed that you need to be mindful of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
