Looking at Anthem, Inc.’s (NYSE:ANTM) earnings update on 31 December 2018, the consensus outlook from analysts appear fairly confident, with profits predicted to increase by 24% next year relative to the past 5-year average growth rate of 12%. Presently, with latest-twelve-month earnings at US$3.8b, we should see this growing to US$4.7b by 2020. 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.
Can we expect Anthem to keep growing?
Over the next three years, it seems the consensus view of the 13 analysts covering ANTM is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around 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 ANTM’s earnings growth over these next few years.
By 2022, ANTM’s earnings should reach US$6.3b, from current levels of US$3.8b, resulting in an annual growth rate of 14%. This leads to an EPS of $25.05 in the final year of projections relative to the current EPS of $14.53. In 2022, ANTM’s profit margin will have expanded from 4.1% to 5.2%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Anthem, there are three pertinent aspects you should look at:
- 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 Anthem 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 Anthem is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Anthem? 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.