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Chemed Corporation (NYSE:CHE) just released its third-quarter report and things are looking bullish. The company beat expectations with revenues of US$528m arriving 2.7% ahead of forecasts. Statutory earnings per share (EPS) were US$4.14, 9.8% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Chemed from three analysts is for revenues of US$2.22b in 2021 which, if met, would be an okay 7.4% increase on its sales over the past 12 months. Statutory per-share earnings are expected to be US$16.81, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$2.25b and earnings per share (EPS) of US$16.54 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The analysts reconfirmed their price target of US$553, showing that the business is executing well and in line with expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Chemed, with the most bullish analyst valuing it at US$600 and the most bearish at US$517 per share. This is a very narrow spread of estimates, implying either that Chemed is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Chemed's past performance and to peers in the same industry. It's clear from the latest estimates that Chemed's rate of growth is expected to accelerate meaningfully, with the forecast 7.4% revenue growth noticeably faster than its historical growth of 6.2%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.8% next year. Chemed is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$553, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Chemed. Long-term earnings power is much more important than next year's profits. We have forecasts for Chemed going out to 2021, and you can see them free on our platform here.
Before you take the next step you should know about the 1 warning sign for Chemed that we have uncovered.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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