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Medica Group Plc (LON:MGP): Is It A Smart Long Term Opportunity?

Simply Wall St

After Medica Group Plc's (LON:MGP) earnings announcement in December 2018, the consensus outlook from analysts appear somewhat bearish, with earnings expected to grow by 13% in the upcoming year against the higher past 5-year average growth rate of 45%. Presently, with latest-twelve-month earnings at UK£7.4m, we should see this growing to UK£8.3m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

Check out our latest analysis for Medica Group

How is Medica Group going to perform in the near future?

Over the next three years, it seems the consensus view of the 4 analysts covering MGP is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of MGP's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

LSE:MGP Past and Future Earnings, September 9th 2019

From the current net income level of UK£7.4m and the final forecast of UK£11m by 2022, the annual rate of growth for MGP’s earnings is 9.6%. This leads to an EPS of £0.098 in the final year of projections relative to the current EPS of £0.066. Analysts are predicting earnings growth to outpace revenue by the end of 2022, resulting in a margin expansion from 19% to 19%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Medica Group, I've put together three relevant aspects 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 Medica Group 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 Medica Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Medica Group? 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.