It's been a mediocre week for Acadia Healthcare Company, Inc. (NASDAQ:ACHC) shareholders, with the stock dropping 15% to US$29.61 in the week since its latest yearly results. It looks like a pretty bad result, all things considered. Although revenues of US$3.1b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 35% to hit US$1.24 per share. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus from Acadia Healthcare Company's twelve analysts is for revenues of US$3.30b in 2020, which would reflect a reasonable 6.2% increase on its sales over the past 12 months. Statutory earnings per share are expected to soar 84% to US$2.29. Before this earnings report, analysts had been forecasting revenues of US$3.27b and earnings per share (EPS) of US$2.34 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$37.27, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Acadia Healthcare Company, with the most bullish analyst valuing it at US$60.00 and the most bearish at US$32.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
In addition, we can look to Acadia Healthcare Company's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. It's pretty clear that analysts expect Acadia Healthcare Company's revenue growth will slow down substantially, with revenues next year expected to grow 6.2%, compared to a historical growth rate of 16% over the past five years. Compare this to the other companies in this market with analyst coverage, which are forecast to grow their revenue at 6.6% per year. So it's pretty clear that, while Acadia Healthcare Company's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. 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 Acadia Healthcare Company. Long-term earnings power is much more important than next year's profits. We have forecasts for Acadia Healthcare Company going out to 2022, and you can see them free on our platform here.
You can also view our analysis of Acadia Healthcare Company's balance sheet, and whether we think Acadia Healthcare Company is carrying too much debt, for free on our platform here.
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