Since Ramsay Health Care Limited (ASX:RHC) released its earnings in June 2018, the consensus outlook from analysts appear fairly confident, as a 45% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of 12%. With trailing-twelve-month net income at current levels of AU$376m, we should see this rise to AU$547m in 2020. Below is a brief commentary on the longer term outlook the market has for Ramsay Health Care. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
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How is Ramsay Health Care going to perform in the near future?
The longer term expectations from the 13 analysts of RHC is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for RHC, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 12% based on the most recent earnings level of AU$376m to the final forecast of AU$642m by 2022. This leads to an EPS of A$3.28 in the final year of projections relative to the current EPS of A$1.87. In 2022, RHC’s profit margin will have expanded from 4.1% to 5.4%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Ramsay Health Care, there are three relevant factors 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 Ramsay Health 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 Ramsay Health Care is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Ramsay Health 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 email@example.com.