Will Spire Healthcare Group Plc’s (LON:SPI) Earnings Grow In The Years Ahead?

Spire Healthcare Group Plc’s (LSE:SPI) most recent earnings update in December 2017 indicated that the company endured a major headwind with earnings deteriorating by -68.66%. Below is my commentary, albeit very simple and high-level, on how market analysts view Spire Healthcare Group’s earnings growth outlook over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. View our latest analysis for Spire Healthcare Group

Analysts’ outlook for the coming year seems positive, with earnings growth more than doubling. Earnings continue to grow strongly in the next couple of years, finally reaching UK£73.37M in 2021.

LSE:SPI Future Profit May 11th 18
LSE:SPI Future Profit May 11th 18

Although it is useful to be aware of the growth rate year by year relative to today’s level, it may be more valuable evaluating the rate at which the company is growing every year, on average. The benefit of this method is that we can get a better picture of the direction of Spire Healthcare Group’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 25.25%. This means, we can assume Spire Healthcare Group will grow its earnings by 25.25% every year for the next couple of years.

Next Steps:

For Spire Healthcare Group, I’ve compiled three essential aspects you should look at:

  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 SPI 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 SPI is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SPI? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!