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Since Paragon Care Limited (ASX:PGC) released its earnings in June 2018, it seems that analyst forecasts are fairly pessimistic, with profits predicted to drop by -10% next year compared with the past 5-year average growth rate of 49%. Currently with a trailing-twelve-month profit of AU$11m, the consensus growth rate suggests that earnings will drop to AU$9.8m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Check out our latest analysis for Paragon Care
How is Paragon Care going to perform in the near future?
The longer term expectations from the 2 analysts of PGC is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around 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 PGC's earnings growth over these next few years.
From the current net income level of AU$11m and the final forecast of AU$20m by 2022, the annual rate of growth for PGC’s earnings is 24%. This leads to an EPS of A$0.060 in the final year of projections relative to the current EPS of A$0.054. However, the expansion of the current 8.0% margin is not expected to be sustained, as it begins to contract to 7.4% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Paragon Care, I've compiled three important aspects you should further research:
- 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 Paragon Care 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 Paragon Care is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Paragon Care? 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 editorial-team@simplywallst.com.
Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
