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After MEDNAX, Inc.'s (NYSE:MD) recent earnings announcement in December 2018, analyst forecasts seem pessimistic, with profits predicted to drop by -12% next year relative to the past 5-year average growth rate of 0.7%. With trailing-twelve-month net income at current levels of US$269m, the consensus growth rate suggests that earnings will decline to US$235m by 2020. Below is a brief commentary on the longer term outlook the market has for MEDNAX. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Exciting times ahead?
Longer term expectations from the 15 analysts covering MD’s stock is one of negative sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of US$269m and the final forecast of US$249m by 2022, the annual rate of growth for MD’s earnings is -1.7%. However, if we exclude extraordinary items from earnings, we see that the profits is predicted to rise over time, resulting in an EPS of $3.19 in the final year of forecast compared to the current $2.95 EPS today. Contraction in the bottom line seems to suggest top-line expansion of 3.4%, which is predicted to lag cost growth leading up to 2022. Furthermore, the current 7.4% margin is expected to contract to 6.2% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For MEDNAX, I've put together three essential factors 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 MEDNAX 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 MEDNAX is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of MEDNAX? 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.