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In December 2018, HCA Healthcare, Inc. (NYSE:HCA) released its most recent earnings announcement, which showed that the business benefited from a large tailwind, leading to a high double-digit earnings growth of 71%. Below is a brief commentary on my key takeaways on how market analysts view HCA Healthcare's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Market analysts' consensus outlook for the coming year seems pessimistic, with earnings decreasing by -7.1%. But in the following year, there is a complete contrast in performance, with generating double digit 1.5% compared to today’s level and continues to increase to US$4.1b in 2022.
While it is informative understanding the rate of growth each year relative to today’s value, it may be more beneficial to determine the rate at which the earnings are growing on average every year. The advantage of this technique is that it ignores near term flucuations and accounts for the overarching direction of HCA Healthcare's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 3.6%. This means that, we can expect HCA Healthcare will grow its earnings by 3.6% every year for the next few years.
For HCA Healthcare, there are three important factors you should further examine:
- 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 HCA 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 HCA is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of HCA? 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 firstname.lastname@example.org. 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.