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What Should We Expect From Quest Diagnostics Incorporated's (NYSE:DGX) Earnings In The Year Ahead?

Simply Wall St

Looking at Quest Diagnostics Incorporated's (NYSE:DGX) earnings update in June 2019, analyst consensus outlook appear cautiously optimistic, as a 11% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of 5.4%. By 2020, we can expect Quest Diagnostics’s bottom line to reach US$816m, a jump from the current trailing-twelve-month of US$733m. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Quest Diagnostics in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

Check out our latest analysis for Quest Diagnostics

How will Quest Diagnostics perform in the near future?

The longer term expectations from the 18 analysts of DGX is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for DGX, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

NYSE:DGX Past and Future Earnings, September 16th 2019

From the current net income level of US$733m and the final forecast of US$908m by 2022, the annual rate of growth for DGX’s earnings is 6.2%. EPS reaches $6.35 in the final year of forecast compared to the current $5.39 EPS today. In 2022, DGX's profit margin will have expanded from 9.7% to 11%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Quest Diagnostics, there are three important aspects you should further examine:

  1. 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.
  2. Valuation: What is Quest Diagnostics 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 Quest Diagnostics is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Quest Diagnostics? 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 editorial-team@simplywallst.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.