Last week saw the newest quarterly earnings release from Georgia Healthcare Group PLC (LON:GHG), an important milestone in the company’s journey to build a stronger business. Revenues of GEL238m were in line with forecasts, although earnings per share (EPS) came in below expectations at GEL0.27, missing estimates by 2.4%. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. We thought readers would find it interesting to see analysts’ latest post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Georgia Healthcare Group’s six analysts is for revenues of GEL959.9m in 2019, which would reflect an okay 3.5% increase on its sales over the past 12 months. Earnings per share are expected to shoot up 35% to GEL0.35. Yet prior to the latest earnings, analysts had been forecasting revenues of GEL959.9m and earnings per share (EPS) of GEL0.29 in 2019. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the sizeable expansion in earnings per share expectations following these results.
The consensus price target was unchanged at GEL11.04, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target just an average of individual analyst targets, so – considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Georgia Healthcare Group, with the most bullish analyst valuing it at GEL13.20 and the most bearish at GEL6.49 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Further, we can compare these estimates to past performance, and see how Georgia Healthcare Group forecasts compare to the wider market’s forecast performance. We would highlight that Georgia Healthcare Group’s revenue growth is expected to slow, with forecast 3.5% increase next year well below the historical 33%p.a. growth over the last five years. Compare this to the other companies in this market with analyst coverage, which are forecast to grow their revenue at 3.5% per year. Factoring in the forecast slowdown in growth, it looks like analysts are expecting Georgia Healthcare Group to grow at about the same rate as the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Georgia Healthcare Group’s earnings potential next year. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have forecasts for Georgia Healthcare Group going out to 2023, and you can see them free on our platform here.
You can also see whether Georgia Healthcare Group is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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