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The most recent earnings release The Hartford Financial Services Group, Inc.’s (NYSE:HIG) announced in December 2018 indicated that the company turned profitable again after incurring negative earnings in the previous financial year. Below, I’ve laid out key numbers on how market analysts perceive Hartford Financial Services Group’s earnings growth outlook over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts’ expectations for the upcoming year seems buoyant, with earnings rising by a robust 21%. This growth seems to continue into the following year with rates reaching double digit 28% compared to today’s earnings, and finally hitting US$2.0b by 2022.
Even though it is helpful to understand the growth each year relative to today’s value, it may be more insightful to estimate the rate at which the company is growing every year, on average. The pro of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Hartford Financial Services Group’s earnings trajectory over time, which may be more relevant for long term investors. To calculate 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 11%. This means, we can presume Hartford Financial Services Group will grow its earnings by 11% every year for the next couple of years.
For Hartford Financial Services Group, there are three pertinent aspects 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 HIG 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 HIG is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of HIG? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.