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What Should Investors Know About Oceania Healthcare Limited's (NZSE:OCA) Growth?

Simply Wall St

On 31 May 2019, Oceania Healthcare Limited (NZSE:OCA) announced its earnings update. Overall, the consensus outlook from analysts appear highly confident, with earnings expected to grow by a high double-digit of 74% in the upcoming year, against the past 5-year average growth rate of 26%. By 2020, we can expect Oceania Healthcare’s bottom line to reach NZ$79m, a jump from the current trailing-twelve-month of NZ$45m. Below is a brief commentary on the longer term outlook the market has for Oceania Healthcare. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

View our latest analysis for Oceania Healthcare

How will Oceania Healthcare perform in the near future?

The longer term expectations from the 4 analysts of OCA 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. 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 OCA's earnings growth over these next few years.

NZSE:OCA Past and Future Earnings, July 27th 2019

From the current net income level of NZ$45m and the final forecast of NZ$89m by 2022, the annual rate of growth for OCA’s earnings is 18%. EPS reaches NZ$0.15 in the final year of forecast compared to the current NZ$0.075 EPS today. Margins are currently sitting at 24%, which is expected to expand to 43% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Oceania Healthcare, I've compiled three pertinent factors you should further research:

  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 Oceania Healthcare 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 Oceania Healthcare is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Oceania Healthcare? 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.